/^.  c 


THE  FUTURE  OF  GERMAN 
INDUSTRIAL  EXPORTS 


Digitized  by  tlie  Internet  Arcinive 

in  2007  with  funding  from 

IVIicrosoft  Corporation 


http://www.archive.org/details/futureofgermaninOOherzrich 


THE  FUTURE  OF  GERMAN 
INDUSTRIAL  EXPORTS 

Practical  Suggestions  for  Safeguarding 

the  Growth  of  German  Export 

Activity  in  the  Field  of  Man- 

ufactures  After  the  War 

BY 
S.    HERZOG 

CONSULTING  ENGINEER 


THE  GERMAN  PLAN  TO  DOMINATE  THE  TRADE  OF 

THE  WORLD,  DRAWN  UP  BY  ONE  OF 

THEIR  LEADING  ENGINEERS 


With  an  Introduction  by 
Herbert  Hoover ^  Vernon  Kellogg^  and  Frederic  C.  Walcott 

TRANSLATED  FROM  THE  ORIGINAL  GERMAN  BY 

M.  L.  TDRKENTINE 


Garden  City  New  York 

DOUBLEDAY,  PAGE  &  COMPANY 

1918 


w 


COPYRIGHT,  19 1 8,  BY 

DOUBLEDAY,  PAGE  &  COMPANY 

ALL  RIGHTS  RESERVED,  INCLUDING  THAT  Of 

TRANSLATION  INTO  FOREIGN  LANGUAGES, 

INCLUDING  THE  SCANDINAVIAN 


PREFACE 

Through  many  years  of  activity  as  an  industrial 
expert  the  author  has  gained  an  insight  into  the 
conditions  of  German  industry  and  into  its  export 
activity.  He  has  had  an  opportunity  to  compare 
its  development  and  efficiency  with  those  of  other 
foreign  industries.  The  War  has  created  conditions 
and  will  be  followed  by  circumstances  which  will 
shape  and  determine  Germany's  export  trade  in  the 
future.  These  conditions  must  be  taken  into  ac- 
count and  suitable  measures  adopted  in  preparation. 
New  trails  will  have  to  be  blazed  if  we  are  to  over- 
come the  obstacles  ahead.  An  enormous  task, 
worthy  of  the  German  people  is  to  be  performed. 
The  Author  ventures  to  hope  that  the  present  work 
may  be  able  to  contribute  a  little  toward  its  accom- 
plishment. 

The  Author. 
Zurich,  in  the  late  summer  of  1915. 


382789 


GERMAN  AUTHOR'S  SYNOPSIS 


PAGE 


A.  Introduction 4 

B.  Factors  Influencing  or  Controlling  Exports  34 

1.  Adaptability  of  the  Export  Industry   .  34 

2.  Attitude  of  Foreign  Countries      .      .  37 

3 .  Emigration  of  Domestic  Industries      .  50 

4.  Economic  Compensations   ....  96 

5.  State  Protection 106 

6.  Industrial  Protective  Unions          .      .  116 

7.  Commercial  Treaties 154 

8.  Ways     of    Denationalizing    German 

Goods 170 

9.  Competitive  Ability      •      ....  184 
10.     Capital r*      •  190 


CONTENTS 


PAGE 


Preface v 

Author's  Synopsis vi 

Introduction xi 

CHAPTER  I 

The  Grand  Strategy  of  the  German  Commercial 
Offensive 4 

All  Commerce  a  War — ^The  World  a  Battlefield— German  System  and 
Organization  Preparmg  for  the  Campaign — Industrial  Genius,  the 
"Terrible  Weapon"  of  Germany — ^The  World's  Hatred  as  a  Liability — 
The  Crime  of  Transplanting  German  Industries — ^The  Suppression  of 
Scientific  Intercourse. 


CHAPTER  II 
Forging  the  Thunderbolt 18 

Safeguarding  Strategic  Secrets — ^The  "Shining  Success"  of  "Un- 
thinkable Authority" — Mobilizing  the  Scientists — Inventing  Substi- 
tutes for  Allied  Materials — Checkmating  Nature — "Treaties,"  a 
Temporary  Expedient — Meeting  the  World's  Prejudice  with  Guile — 
Denationalization,  a  Commercial  Masquerade — Soothing  Propaganda 
— Meeting  the  American  Menace. 

CHAPTER  III 
The  Camouflage  of  Commerce  ....       34 

The  Impenetrable  Disguise  of  the  Diisseldorf  Drummer — Faking  the 
Appearance  of  Friendly  Business — ^The  High  Art  of  Imitation — 
Relentless  Retribution  Upon  Allied  Interference — "Defence  Statistics," 
the  Barometer  of  the  Battle — Strategic  Use  of  the  Boycott  and  the 
"Corrective"  Embargo. 


vui  Contents 

CHAPTER  IV 
"Indispensable  Industries" 50 

Imperial  Military  Control  to  Insure  Exclusive  Possession  of  Strategic 
Industries — ^The  German  Plan  to  Eliminate  the  Freedom  of  Science 
and  Property — Potash  a  Prussian  Monopoly — ^The  Inimitable  Dye- 
stufFs  and  Chemicals — Principles  of  the  Embargo  Battle — Some 
Definitions  of  "Indispensable''~The  High  Road  to  Technical  Super- 
iority— ^An  Infallible  Price-cutting  Device. 


CHAPTER  V 

The  Golden  Guarantee  and  the  Discipline  of 
Labour 66 

The  Fusion  of  German  Business  and  the  German  Army — ^The  Benevo- 
lence of  State  Supervision  of  Industry — Raw  Material,  the  Tale  of 
Available  Ammunition — Surplus  Stocks,  the  "Reserves'*  of  the  Trade 
War — Subsidies  and  Compensations — Levying  Contributions  on  All 
Business — ^The  Guarantee  Fund — Cheap  Materials — ^The  Composi- 
tion of  the  General  Staff — Crushing  "Unthinkable"  Labour  Disputes — 
Stopping  Leaks  to  the  Blackhst. 


CHAPTER  VI 
The  Chinese  Wall  of  Secrecy        ...       82 

Hounding  Allied  Money  Out  of  Germany! — "Capital  Does  Not  Exist 
Independently  of  the  State" — Prods  to  Speed  Up  "Progress'* — Com- 
pulsory Reports  of  Discoveries — ^The  Veil  of  Mystery  to  Enshroud 
German  Inventions — "Special  Privileges'*  for  "Protective"  Industries 
— Drafting  Labour  for  Life — Strict  Exclusion  of  Foreigners  from 
Teuton  Enterprises — ^The  Ban  on  Entente  Capital. 


CHAPTER  VII 

Diplomacy,  the  Advance  Guard  of  the  Export 
War 96 

Private  Advantage  and  Hidden  Rebates,  the  Basis  of  German  Business 
— Obtaining  Secret  Privileges  Abroad — Confidential  Exchange  of 
"Compensations" — A  Tempting  Bargain  in  Rebates  and  Premiums 
— ^The  Prize  Bait  of  the  Prussian  Ambassador. 


Contents  ix 

CHAPTER  VIII 
A  Feudal  System  of  Commerce  ....     io6 

The  Panacea  of  Arbitrary  Power — ^The  Unquestioned  Command  of 
Supplies — Dispersing  Workmen's  Unions-^The  Universal  Levy  on 
Capital  and  Labour — -State  Ownership  of  the  Individual — ^Jurisdiction 
Over  the  Minds  of  Scientists. 

CHAPTER  IX 
Organization  of  the  German  Export  Army    ii6 

The  Army  Corps  of  the  Commercial  Offensive— Industrial  Divisions 
in  Action — The  Board  of  Strategy — The  General  Staff — Tactics  of  the 
Scientific  Division — Drafting  and  Drilling  the  Inventors — ^Assembling 
the  Fruits  of  Genius — Capturing  Foreign  Inventions — ^The  Industrial 
Divisfion,  the  Compulsory  Information  Bureau. 

CHAPTER  X 
The  Export  Army  in  Action.     .     .     .     .     132 

The  Ubiquitous  Commercial  Division — ^The  Dictator  of  the  World's 
Pricps — In  Charge  of  the  War  Chest — ^The  Espionage  Headquarters — ^ 
The  Men  Behind  the  Guns — ^The  Supreme  Court  of  Creation — Launch- 
ing Propaganda — The  Listening  Post  of  Kultur — ^The  Automatic 
Collection  Agency — ^The  Money  Kings'  Campaign. 

CHAPTER  XI 

A  Study  in  Scarlet.  The  Proposed  Treaties     i  54 

Blood  and  Bombast — ^The  Kaiser's  "Minimum  Demands" — ^The 
Exclusive  Favouritism  of  Germany — ^Unlimited  Right  to  Take  Allied 
Materials — German  Supervision  in  Allied  Countries — Control  of  the 
Allied'  Freight  Rates — Punishment  of  Hostile  Boy  cotters — Restoring 
the  "Stolen"  Patents — Allied  Guarantees  Against  "Insufferable 
Discrimination" — ^A  Warm  Welcome  for  the  "Federation." 

CHAPTER  XII 

The   Denationalization   Dodge.    An  Antidote 
TO  Hatred 170 

Commerce  Incognito — The  Stratagem  of  Deceit — Outwitting  the  Allied 
P.iyers — ^A  Severe  Lesson  in  Customs  Procedure — Propaganda  Under 
Cover — A  Flank  Movement  Through  Neutral  Ground. 


X  Contents 

CHAPTER  XIII 

The    Hereditary   Workmen    of   Combined    In- 
dustries  184 

The  Ban  on  the  Small  Business  Man — "Permanent"  and  Hereditary 
Labour — ^The  Crime  of  Incompetence — A  Drastic  Remedy  for  Bargain 
Sales. 

CHAPTER  XIV 
The  Curb  on  Capital 190 

The  Kaiser*s  Complaint: — ^The  Predatory  Allies  Violate  Private 
Property! — ^The  Evil  Influences  of  Independence — ^The  Blessings  of 
Financial  Bondage — German  Money  for  Germany  —  Relation  of 
Investments  to  Invasion. 


INTRODUCTION 

**If  there  is  anything  to  be  gained  by  being  hon- 
est, let  us  be  honest;  if  it  is  necessary  to  deceive,  let 
us  deceive."  Thus  wrote  Frederick  the  Great  in  the 
middle  of  the  i8th  Century — the  man  who  laid 
the  foundation  of  Pan-Germanism,  which  this 
world  war  was  expected  to  achieve.  Not  content 
with  dominion  by  force  of  arms,  we  find  Germany 
plotting  for  commercial  supremacy,  with  that  in- 
solent disregard  of  the  rights  of  others  and  that  re- 
sort to  deception  that  has  characterized  all  her 
policies  since  Frederick  the  Great's  reign. 

The  book  of  which  this  is  a  translation  was  written 
by  an  eminent  German  engineer  and  economist, 
and  pubHshed  in  191 5,  during  the  second  year  of 
the  war.  This  book  presents  ingenious  plans  for 
driving  home  commercial  victories  at  the  expense  of 
the  trade  of  other  countries.  Like  all  of  Germany's 
plans  aflFecting  other  nations,  the  entire  conception 
depends  upon  deceit  and  a  superselfishness;  not  one 
word  touching  upon  reciprocity,  not  one  word  in 
recognition  of  any  international  obligations. 

It  was  obviously  written  exclusively  for  home 
consumption,  and  not  intended  for  those  outside  the 
Iron  Circle.  It  should  be  a  warning  to  us.  We 
should  study  it  with  care,  and  keep  our  eyes  and  ears 


xii  Introduction 

alert  for  other  warnings  of  this  sort,  that  in  peace 
we  may  be  prepared  to  meet  this  design  of  commer- 
cial rapine,  this  crushing  of  the  industries  of  other 
countries. 

For  forty  years  the  Germans  have  been  plotting  to 
realize  their  dream  of  Pan-Germanism — eventual 
world  conquest  and  dominion.  For  two  genera- 
tions they  have  been  thinking  in  terms  unknown  or 
little  understood  by  an  innocent  and  unsuspecting 
world.  The  Prussian  philosophy  that  might  makes 
right,  that  the  State  is  supreme,  has  completely 
possessed  the  ruling  and  upper  classes  of  Germany, 
both  miHtary  and  commercial,  until  deception  and 
fraud  form  the  background  of  their  most  important 
international  relations  and  undertakings.  They  have 
made  Germany  an  inherently  dishonest  nation. 

Their  military  plans  were  successfully  concealed 
for  years,  and  when  their  dreams  of  conquest  did 
outcrop  occasionally,  there  were  few  with  an  inti- 
mate enough  knowledge  of  the  complete  premedi- 
tated and  systematic  degeneration  of  the  German 
official  character  to  read  the  handwriting  on  the 
wall. 

Well  organized  and  comprehensive  espionage  and 
insidious  German  propaganda  have  been  at  work 
for  two  generations  to  plan  the  success  of  German 
victories.  In  the  early  90's  of  the  last  century,  the 
German  Volkschule  was  organized  to  teach  the 
masses  absolute  subserviency  to  the  upper  and  gov- 
erning classes,  whose  education  diverged  from  that 
of  the  lower  classes  at  the  age  of  seven  or  eight. 


Introduction  xiii 

The  education  of  these  two  classes  has  been  so  di- 
vergent for  thirty  years  that  the  effects  are  now 
clearly  traceable  in  the  younger  men  in  the  Army,  as 
contrasted  with  the  members  of  the  Landsturm 
Army.  The  Landsturm  men  are  much  more  hu- 
mane, and  have  a  restraining  influence  in  the  Army. 
They  have  not  been  guilty  of  the  excesses  that  are 
chargeable  to  the  younger  men.  The  younger  men, 
schooled  from  infancy  under  the  new  system  to  obey 
orders  in  a  machine-like  way,  under  Prussian  leader- 
ship, have  become  so  ruthless,  so  cruel,  that  the  en- 
tire civilized  world  looks  on  aghast. 

German  rule  means  the  breaking-down  of  all  order, 
the  exchange  of  personal  liberty  and  national  free- 
dom for  force,  of  right  for  might,  of  justice  for  the 
mailed  fist. 

The  world  should  have  been  forewarned.  Books 
were  written,  maps  constructed,  by  well  known  Ger- 
man authorities  for  the  enlightenment  of  the  Ger- 
man people,  and  these  books  reached  the  outside 
world,  but  civiUzation,  accustomed  to  the  pursuits 
of  peace,  turned  a  deaf  ear,  and  is  now  paying  the 
penalty  for  refusing  to  see  and  hear. 

Now  another  conception  comes  out  of  the  heart 
of  Germany,  that  threatens  the  commercial  interests 
of  unsuspecting  nations — carefully  thought  out,  with 
characteristic  German  thoroughness,  openly  advo- 
cating the  breaking  down  of  all  business  ethics,  re- 
lying upon  trickery  and  circumvention  to  gain 
their  end.  This  promises  to  stoop  at  nothing,  from 
national  dumping  of  goods  to  crush  competition  to 


XIV  Introduction 

false  labels  and  disguise  of  the  origin  and  the  break- 
ing of  contracts  that  prove  disadvantageous  to  the 
German. 

Let  the  manufacturing  and  banking  interests  and 
the  labouring  and  professional  classes  of  all  nations 
be  warned  in  time  to  devise  antidotes  and  counter 
attacks  to  the  Machiavellian  devices  of  a  class  gone 
mad  with  lust  of  conquest,  deliberately  plotting  to 
fatten  itself  upon  the  life  blood  of  other  peoples  even 
after  the  war.  Let  us  consider  in  making  peace  what 
protection  we  can  give  to  the  commercial  existence 
of  the  freed  nations. 

Herbert  Hoover 
Vernon  Kellogg 
Frederic  C.  Walcott 
U.  S.  Food  Administration, 
Washington,  D.  C. 


NOTE  TO  THE  READER 

The  contents  and  interesting  points  are  summar- 
ized in  one  page  preceding  each  chapter.  By  this 
editorial  note  it  is  hoped  to  help  the  reader  visualize 
and  more  fully  realize  the  significance  of  the  text 
written  in  true  Teutonic  style. 


WW 


THE  FUTURE  OF  GERMAN 
INDUSTRIAL  EXPORTS 


/N  THIS  chapter  the  author 
blandly  admits  that  after  the 
war  the  entire  world  will  regard 
the  Germans  with  a  hatred  so  bitter 
that  even  the  commercial  treaties 
they  expect  to  dictate  and  write  in 
blood  will  not  prevail  to  open  a  cor- 
dial channel  for  their  industrial 
products. 

Notwithstanding  this  the  Germans 
still  plan  and  expect  to  dominate 
the  trade  of  the  world.  For  trade 
to  them  is  simply  another  form  of 
combat  to  the  death.  And  for  this 
they  are  organized  and  prepared. 

Their  export  trade  in  its  maximum 
proportions  is  to  be  forced  down  the 
throats  of  America  and  the  Allies. 
The  invincible  weapon  is  to  be  the 
*' unsurpassable  goods"  produced  by 
'  'indispensable  Indus  tries, ' '  —  mo- 
nopolies conducted  under  military 
system,  rigidly  confined  to  German 
soil,  and  guarded  by  an  impene- 
trable veil  of  secrecy. 


CHAPTER   ONE 

THE  GRAND  STRATEGY  OF  THE  GERMAN 
COMMERCIAL  OFFENSIVE 

All  Commerce  a  War — ^The  World  a  Battlefield — German  Sys- 
tem and  Organization  Preparing  for  the  Campaign — Industrial 
Genius,  the  "Terrible  Weapon"  of  Germany — ^The  World's 
Hatred  as  a  Liability — ^The  Crime  of  Transplanting  German 
Industries — ^The  Suppression  of  Scientific  Intercourse. 

A,    Introduction 

SUCCESS  can  only  be  obtained  through  sys- 
tematic methods  and  thorough  preparation. 
The  mihtary  and  economic  accomplishments 
of  Germany  form  the  clearest  proof  for  this  assertion. 
The  necessity  for  its  application  is  evident  wherever 
results  are  to  be  obtained  without  waste  of  energy, 
by  the  shortest  route  and  with  the  least  expenditure 
of  material,  mental,  and  financial  power.  Eyes 
wide  open  to  the  situation,  and  a  mind  intent  on  the 
goal  are  essentials  of  success.  Far-sightedness  and 
care  form  its  foundations.  The  more  carefully  these 
virtues  are  cultivated,  the  firmer  becomes  the  foun- 
dation, and  more  profitable  the  whole  enterprise. 

Nevertheless,  the  strongest  buildings  with  the 
firmest  foundations  are  liable  to  give  way  before  the 
interference  of  outside  forces,  whose  origin  and  pres- 


Strategy  oj  the  German  Commercial  Offensive     5 

ence  could  not  be  reckoned  with  during  the  con- 
struction. In  such  cases  the  builder  adopts  the 
quickest  expedient  possible,  broadening  and  strength- 
ening the  foundations  to  support  the  props  and 
stays  which  will  counteract  the  outside  forces.  A 
manufacturer  is  invariably  resourceful  in  perfecting 
his  own  processes,  but  in  the  practice  of  economy  he 
is  not,  in  spite  of  the  fact  that  in  the  latter  case  as 
in  the  former  the  same  fundamental  principles  hold 
good  even  if  the  nature  of  the  expedients  within 
command  is  different. 

INDUSTRIAL    GENIUS,    THE    "TERRIBLE    WEAPON''    OF 
GERMANY 

One  of  the  strongest  girders  which  has  been 
wrought  into  the  fabric  of  the  German  Empire, 
whose  trustworthiness,  though  suspected  by  many, 
has  been  recognized  by  the  whole  world  only  through 
the  fortunes  of  war,  is  Germany's  genius  in  industry. 
A  nation  which  was  once  a  leader,  but  which  in  the 
course  of  time  became  backward,  even  in  industry, 
thought  herself  so  threatened  by  the  potency  of 
this  economic  weapon  that  she  kindled  the  most 
terrible  and  fearful  of  all  world  conflagrations.  But 
this  genius  has  proven  impregnable  in  the  face  of  all 
attacks.  Its  might  and  sharpness  are  now  freely 
admitted  by  the  enemies  who  thought  to  shatter  it. 
Because  the  weapon  is  so  terrible,  because  German 
industrial  genius  is  showing  itself  superior  to  all 
opposition  even  in  military  affairs,  hostile  ingenuity 
in  the  future  will  direct  itself  before  all  else  toward 


6       The  Future  of  German  Industrial  Exports 

undermining  this  mighty  bulwark  of  the  German 
pile.  After  all,  we  can  not  blame  the  enemy  so 
much  for  that,  but  we  must  make  his  mole-hill  labour 
thoroughly  unpleasant  for  him  and  must  prevent  his 
getting  at  the  bulwark's  foundation.  Industrial 
exportation,  however,  forms  the  most  important  part 
of  this  foundation.  German  manufacturing  skill, 
which  surely  can  not  be  accused  of  having  lain 
dormant  in  the  last  four  decades,  appears  to  the 
world  in  the  terrible  times  of  War  like  a  giant  who 
suddenly  begins  to  stretch  himself  with  unsuspected 
vigour,  after  a  long  rest;  like  a  mountain  giant  who 
rends  the  massive  rocks  as  he  lifts  himself  to  his  full 
height.  The  foundation  must  be  broad  and  strong 
if  it  is  to  permanently  and  safely  carry  the  new 
construction  resting  upon  it.  German  skill  in 
industry  and  manufacture  has  developed  within  it- 
self unexpected  versatility  and  strength  since  the 
outbreak  of  the  war — new  powers  ever  springing 
magically  from  the  old — and  all  built  upon  the  same 
foundation!  To  correspond  with  such  a  sudden  ex- 
pansion that  foundation  must  be  broadened  and  made 
firm.  The  clue  to  this  is  offered  by  the  Export  Trade! 
There  lies  in  the  air,  there  lies  unexpressed  on  the 
lips,  there  leaps  constantly  from  mind  to  mind  the 
question :  What  of  Germany^ s  industrial  exports  after 
the  War  ? 

THE   world's   hatred   AS   A   LIABILITY 

For  peace  will  come,  yet  hate  will  remain  in  the 
hearts  of  those  who  have  conjured  up  this  bloody 


Strategy  of  the  German  Commercial  Offensive     J 

struggle  and  who  are  inferior  therein,  morally,  physic- 
ally, and  economically.  Hate  is  the  worst  of  all 
competitors;  for  it  can  stop  all  purchasing  of  supplies 
by  denying  itself  even  the  most  indispensable  articles, 
at  least  for  the  time  being;  and  when  there  is  at 
length  no  other  alternative,  it  will  order  what  it 
must  have,  even  perhaps  at  ruinous  prices,  from  every 
other  producer,  rather  than  from  the  German, 
"Study  your  neighbour  and  you  can  excuse  his 
faults";  that  is  the  watchword  for  the  future.  Its 
application  will  be  elucidated  farther  on.  To 
overlook  the  self-love  of  another  is  always  difficult, 
for  self-love  is  egoistic;  to  avoid  offending  the  self- 
love  of  hate,  the  greatest  in  the  world  (for  it  feeds 
forever  on  a  delusion),  is  a  colossal  task.  Yet  it 
must  and  assuredly  will  be  performed;  (what  must 
be  done  the  Germans  can  do;  that  is  a  lesson  of  this 
war).  To  outline  the  nature  and  extent  of  this  one 
problem,  among  many  which  are  to  be  discussed 
farther  on,  will  be  a  task  of  these  observations. 

The  sages  and  histories  teach  that  after  the  old 
Germans  made  peace  and  buried  their  battle-axes, 
they  also  prepared  an  enduring  grave  for  their 
hatred.  In  this  custom  as  in  other  respects  the 
Germans  of  to-day  have  remained  true  to  their 
forefathers.  But  other  nations  feel  differently. 
Time  is  indeed  the  great  healer,  but  German  industry 
has  no  time  to  wait.  It  must  open  up  for  its  sud- 
denly awakened  powers  new  and  greater  fields  of 
activity;  it  can  not  fold  its  hands  in  its  lap  until  a 
new  generation  has  grown  up  in  the  land  of  its 


8        The  Future  of  German  Industrial  Exports 

former  opponents,  a  generation  which  knows  only 
from  books  the  horrors  and  losses  of  war.  For  that 
is  how  long  it  would  take!  Well  is  it  said  that  the 
nations  of  to-day  can  no  longer  get  on  without  each 
other,  that  they  are  interdependent.  All  the  more 
difficult  will  mutual  intercourse  become,  for  it  will 
be  dictated  by  the  force  of  circumstances,  and  coer- 
cion only  adds  bitterness  to  the  unbearable.  He  who 
reckons  without  this  factor  in  the  future,  reckons 
amiss.  Germany's  export  trade  must  gird  itself  to 
cope  with  this  condition.  It  must  enter  hatred  as  a 
liability.  In  order  to  balance  this  entry  it  must  have 
at  its  command  the  asset  of  ever  increasing  material 
and  mental  vigour  and  foresight.  That  will  be 
difficult.  But  difficulties  only  add  zest  to  the  accom- 
plishment. 

To  the  moot  question  of  the  future  of  German  in- 
dustrial exports,  the  stock  solution  offered  every- 
where is  that:  *'This  must  be  left  to  the  future 
treaty  of  peace  and  to  the  commercial  treaty  then 
dictated. '^  The  answer  was  easy.  Nevertheless  the 
solution  is  false,  even  apart  from  the  fact  that  the 
par  value  of  treaties  has  reached  nil  and  will  not  im- 
mediately recover  from  its  slump — using  this  word 
in  both  a  material  and  ethical  sense.  The  most 
recent  past  teaches  that:  "He  who  would  keep 
treaties  does  not  need  them,  he  who  chances  them — 
takes  his  chances. '^  To  be  sure,  economic  questions 
will  play  a  great  role  in  the  peace  negotiations.  But 
upon  the  new  commercial  treaties  which  will  then 
come,  Germany's  export  trade  can  scarcely  base  its 


Strategy  of  the  German  Commercial  Offensive     9 

sole  reliance.  Commercial  treaties  will — ^perhaps — 
open  new  paths;  German  industry  itself  must  make 
these  practicable.  Even  the  most  favourable  cus- 
toms arrangements  are  of  no  value  if  for  chauvinistic 
or  economic  reasons  the  anticipated  buyer  will  take 
nothing  from  his  former  enemy.  He  will  scarcely 
listen  to  a  ''Must'M 

The  experts  preach:  ^^International  commerce 
can  not  cease  permanently;  international  exchange 
of  goods  must  begin  again  after  the  war."  It  will 
probably  be  thus;  yet  who  will  guarantee  that  in 
future  Germany's  manufactures  will  not  be  elimin- 
ated or  at  least  in  the  main  excluded  from  inter- 
national commerce  through  the  passive  resistance 
of  her  present  enemies,  of  whom  there  are,  to  be 
sure,  more  than  is  necessary  and  profitable?  This  is 
possible,  in  fact  almost  probable,  wherever  it  can  be 
done!  What  was  not  attainable  by  force  of  arms 
or  by  an  unheard-of,  even  if  vain,  starvation  policy 
— the  beating  down  of  the  Germans — ^will  be  at- 
tempted by  the  slow  poison  of  the  unconfessed  boy- 
cotting of  German  products.  Against  that,  also, 
we  must  be  forearmed,  even  at  the  risk  of  our 
preparations  proving  unnecessary,  because  things 
turn  out  better  than  can  be  anticipated.  Optimists 
will  probably  point  out  that  the  manufacturing  in- 
dustry of  Germany  can  do  things  outside  the  capa- 
city of  any  other  country.  As  a  classical  example 
in  support  of  this  assertion  they  will  cite  among 
others,  the  case  of  the  German  chemical  industry, 
and  the  embarrassment  in  which  her  enemies  found 


lo      The  Future  of  German  Industrial  Exports 

themselves  when  no  longer  able  to  import  certain 
chemical  products  from  Germany.  In  cases  of  su- 
periority like  this,  measures  may  perhaps  easily  be 
framed  to  meet  the  open  or  concealed  attacks  of  her 
enemies  upon  her  export  trade — measures,  speaking 
unambiguously,  which  will  put  the  screws  on  them. 
Compulsion  can  be  exercised  in  war,  never  in  peace, 
otherwise  it  is  not  peace  at  all.  Commerce  which  is 
supported  at  the  point  of  the  bayonet  can  not  be 
maintained  permanently;  it  is  in  its  essence  unsound. 
Whoever  reads  a  startling  article  in  the  leading 
English  technical  magazine,  discussing  measures  to 
be  used  in  future  against  German  industry,  will  be 
convinced  that  only  with  the  making  of  peace  will  the 
full  conflict  in  the  realm  of  manufacture  break  forth 
— a  conflict  w^hose  objective  is  the  export  trade  of 
Germany.  In  that  paper,  there  was  proclaimed  an 
economic  warfare,  based  to  a  certain  extent  upon 
science — a  warfare  to  gain  the  mastery  over  German 
industry.  No  German  manufacturer  will  be  dis- 
turbed on  this  account.  Rather  he  will  see  in  it  a 
spur  to  increased  intellectual  activity.  Neverthe- 
less, this  article  has  warned  us  to  be  on  our  guard, 
especially  since  it  centred  above  all  else  in  a  proposal 
to  transplant  the  fruits  of  German  industry — in  actual 
practice — to  English  soil.  Should  this  succeed,  Ger- 
man industrial  exports  would  be  severely  hit. 

THE    CRIME    OF   TRANSPLANTING   GERMAN   INDUSTRIES 

It   is   therefore   essential    for    us   to    get    clearly 
before  us  measures  which  will  knock  the  bottom  out 


Strategy  of  the  German  Commercial  Offensive  1 1 

of  the  scheme  of  transplanting.  It  must  be  admitted 
here  and  now  that  to  transplant  an  invaluable  in- 
dustry IS  possible,  that  it  brings  for  the  moment 
great  material  advantages  to  employees  from  the 
mother  country  who  promote  it,  and  to  those  who 
place  themselves  in  its  service,  and  that  if  it  succeeds 
it  can  throttle  the  mother  industry  in  her  influence 
upon  the  market  of  the  country  to  which  it  has  been 
removed.  Examples  from  recent  years  bring  this 
fact  before  us  in  startling  fashion;  merely  call  to 
mind  the  transplanting  of  the  watch,  silk,  and  em- 
broidery industries,  due  for  the  most  part  to  the  sel- 
fishness of  single  individuals.  The  countries  to 
which  they  were  removed  had  formerly  supplied 
themselves  solely  through  importation;  but  there- 
after, to  the  injury  of  the  mother  country  from  which 
these  industries  came,  they  not  only  made  them- 
selves independent  as  far  as  their  own  needs  were 
concerned,  but  even  became  strenuous  competitors 
of  the  mother  country.  Farther  on,  we  will  discuss 
ways  of  meeting  such  a  situation. 

The  idea  of  economic  ** compensations"  has  for  the 
first  time  reached  practical  realization  on  a  large 
scale  through  the  war.  The  neutral  powers  in  par- 
ticular resorted  to  it  in  order  to  supply  their  vital 
needs  and  maintain  their  economic  existence.  Com- 
pensation has  become  a  weapon  in  international 
economic  warfare  and  will  probably  remain  after 
the  war  in  international  commerce.  It  will  become 
effective  to  the  degree  that  transplanting  of  industries 
is  prevented;  for  by  transplanting  compensation  is 


12      The  Future  of  German  Industrial  Exports 

rendered  futile.  Farther  on  we  will  inquire  into  the 
role  which  compensations — only  those  to  be  sure 
whose  value  can  be  maintained  undiminished  for  a 
long  time — ^will  play  in  the  future  commercial  treaties. 
The  possibility  of  their  exerting  a  decisive  influence 
can  scarcely  be  called  in  question  in  the  light  of 
present  experiences. 

Experience  teaches  that  state  control — when  it  is 
exercised  as  is  the  German  in  farsighted  and  in- 
genuous fashion  (a  lesson  we  are  learning  from  the 
war) — becomes  an  armour,  protecting  our  dom.estic 
inventions  and  industrial  achievements  in  such  a 
way  that  these  acquire  a  value  as  compensations. 
This  state  control  will  be  exercised  in  a  manner 
adapted  to  peace  times,  and  without  the  severity 
which  war  doubtless  requires.  It  will  apply  to 
industries  which  have  not  yet  been  robbed  of  their 
fruits  by  foreign  countries.  In  this  connection 
what  we  are  advocating  is  not  a  sort  of  state  tutelage 
or  guardianship.  This  all  too  easily  resolves  into  a 
hindrance  to  development.  But  what  is  meant  is 
state  protection,  which  takes  care  that  what  has 
been  sown  on  domestic  soil  is  also  reaped  on  domestic 
soil.  The  question  of  primary  importance  here  is 
not  what  protective  principle  is  to  be  chosen,  but 
what  parties  are  to  be  entrusted  with  estabhshing  it. 
That  these  parties  must  be  taken  from  the  industries 
in  question,  is  evident,  and  also  that  expert  and  dis- 
interested government  officials  must  be  associated 
with  them  in  order  to  forestall  any  selfish  policies 
which   could   be  harmful  to  the  common   welfare. 


Strategy  of  the  German  Commercial  Offensive   13 

This  protection  essential  to  industry  will  extend 
not  only  to  the  materials  with  which  industry  works 
and  to  the  intelligence  which  devised  its  processes, 
but  also  to  the  proprietor  of  the  materials,  and  to 
the  brain  workers  or  hand  labourers.  It  is  clear 
also  that  coercion  must  be  used  where  benevolent 
protection  is  not  sufficient.  For  the  transplanting 
of  domestic  industries,  which  have  been  hitherto 
beyond  the  grasp  of  foreign  countries,  must  be 
prevented  for  the  general  good,  even  if  private 
interests  suffer  on  that  account.  The  damage  thus 
caused  will  ordinarily  be  only  a  matter  of  dollars 
and  cents  to  private  individuals,  and  without  doubt 
will  remain  within  easily  supportable  limits.  The 
demand  for  a  police-state  (the  outworn  cure-all  for 
every  ill)  finds  no  support  nor  echo  in  these  dis- 
cussions; that  should  be  especially  emphasized. 

THE    SUPPRESSION   OF   SCIENTIFIC   INTERCOURSE 

Some  one  may  raise  the  objection  that  by  measures 
of  this  sort  the  scientific  intercourse  which  took  place 
between  the  nations  before  the  war  will  be  suppressed, 
to  the  detriment  of  science  and  progress.  Such  a 
reproach  is  scarcely  justified,  for  exchange  of  ideas 
of  a  scientific  nature  can  never  be  stopped,  primarily 
— ^to  tell  the  honest  truth — because  its  universal 
source  is  selfishness,  the  natural  impulse  to  enrich 
oneself,  to  out-do  one*s  fellow  men,  to  work  ahead 
and  push  upward.  The  form  of  international  scien- 
tific intercourse  and  exchange  may  perhaps  be 
altered,  in  fact  that  is  even  probable;  its,  essential 


14      The  Future  of  German  Industrial  Exports 

nature  and  purpose  will  remain  the  same.  The 
international  scientific  congresses  which  lapsed  more 
and  more  into  festivities  will  probably  be  discarded 
for  a  considerable  time,  at  least  so  far  as  the  holding 
of  conventions  goes.  This  ought  not  to  be  any 
cause  for  regret,  for  the  actual  scientific  work  was 
always  done  long  before  the  congresses  and  merely 
found  in  them  its  external  evidence.  Exchange  of 
ideas  and  opinions,  though  limited  and  constrained 
because  of  the  feelings  of  the  times,  will  go  on.  It 
may  take  place  only  in  writing,  but  such  correspon- 
dence was  conducted  in  the  past  anyivay,  notwith- 
standing the  verbal  intercourse  which  preceded  it. 
Where  scientific  conventions  of  an  international 
nature  have  the  unconfessed  purpose  of  prying  into 
the  secrets  of  others,  they  must  be  stamped  as  dan- 
gerous, if  there  is  involved  any  question  of  industrial 
improvements,  whose  value  as  compensations  is 
clearly  evident.  The  just  historian  must  in  any 
event  record  that  the  breaking  of  international  scien- 
tific unity,  which  unity  reached  its  height  and  found 
outward  expression  in  the  scientific  academies  in 
various  countries,  did  not  take  place  through  the 
Germans.  It  was  earlier  believed  that  science  is 
elevated  above  the  emotions  of  the  nations.  The 
immediate  past  teaches  that  the  emotions  are 
mightier  than  science,  that  they  brusquely  and 
trivially  break  the  bonds  which  have  been  joined  by 
science  in  the  course  of  centuries  (presumably  for 
eternity).  In  the  face  of  such  events  as  this,  which 
were  once  thought  impossible,  mistaken  sentimen- 


Strategy  of  the  German  Commercial  Offensive   1 5 

tality  is  soon  silenced.  Refinements  of  feeling  be- 
tween different  countries  have  a  way  of  vanishing 
into  thin  air,  especially  where  they  are  forced  and 
unnatural.  Necessity  stands  above  desirability; 
maintenance  of  the  value  of  compensations  under 
certain  circumstances  can  be  a  necessity  before  which 
everything  else  must  give  way. 


To  BE  invincible,  ''the  unsur^ 
passable  goods/'  by  the  lack  of 
which  Germany  is  to  strangle 
us  into  swallowing  the  whole  out" 
put  of  their  factories,  must  be  in- 
dependent of  nature's  materials 
found  in  Alabama,  New  Mexico, 
Chile,  and  other  ^'prejudiced'' 
countries.  Well,  they  have  this 
planned  also,  as  this  chapter  shows. 
Mobilized  and  drilled,  the  scientists 
of  the  Empire  will  be  incorporated 
into  the  export  army  and  under  dis- 
cipline  are  to  produce  Prussian  sub- 
stitutes for  all  such  necessary  raw 
materials. 

The  Germans  propose  to  take 
drastic  action  to  meet  what  they 
call  the  menace  of  great  stores  of 
surplus  capital  which  America  has 
accumulated  through  what  they 
term  the  regardless  and  barbarous 
manufacture  of  murderous  war 
supplies.  One  of  the  principal 
manoeuvres  will  be  the  adoption 
and  improvement  of  the  American 
system  of  standardizing  manu- 
factures. 


CHAPTER  TWO 

FORGING  THE  THUNDERBOLT 

Safeguarding  Strategic  Secrets — ^The  ''Shining  Success"  of 
** Unthinkable  Authority" — Mobilizing  the  Scientists — Invent- 
ing Substitutes  for  Allied  Materials — Checkmating  Nature — 
** Treaties/*  a  Temporary  Expedient — Meeting  the  World's 
Prejudice  with  Guile — Denationalization,  a  Commercial  Masque- 
rade— Soothing  Propaganda — Meeting  the  American  Menace. 

THE  protection  of  compensation  values  will  very 
often  amount  to  the  protection  of  manufacture 
ing  secrets.  It  must  be  confessed  that  up 
to  the  present  time  much  remains  to  be  desired  in 
this  respect.  Lack  of  organization  is  most  of  all  to 
blame.  As  a  consequence  too  many  are  initiated 
into  the  secrets.  Financial  shortsightedness  is 
also  a  cause.  The  protection  of  manufacturing 
secrets  is  the  best  safeguard  against  transplanting, 
provided  of  course  that  the  possessor  of  the  secrets 
of  manufacture,  whether  he  be  the  rightful  one  or 
not,  does  not  wish  a  transplanting.  If  the  financial 
returns  remain  within  satisfactory  limits  the  desire 
to  migrate  will  not  arise;  in  other  cases  measures  such 
as  will  be  discussed  farther  on  are  necessary. 

The  state  protection  which  will  eventually  become 
necessary  can  be  prepared  for  in  a<n  effective  way  by 
the  formation  of  certain  associations  that  will  take 

i8 


Forging  the  Thunderbolt  19 

protective  measures  in  the  interest  of  their  own 
members.  Such  measures  will  have  the  purpose 
of  preventing  a  transfer  of  valuable  industries  to 
foreign  countries.  Upon  the  degree  of  protection 
afforded  by  such  associations  of  the  industries  con- 
cerned, will  depend  whether  state  protection  can 
be  regarded  as  superfluous  or  not,  and  whether  the 
association  in  a  certain  degree  acquires  a  standing  as 
an  organization  representing  the  State,  or  is  officially 
recognized. 

THE  "shining  success"  OF  "UNTHINKABLE  AUTHORITY" 

War  conditions  have  caused  organizations  for  the 
purchase,  sale,  and  distribution  of  material  to  spring 
up  in  our  economic  life,  the  possibility  of  whose  for- 
mation everyone  would  have  doubted  before  the 
outbreak  of  war — economic  organizations  with  for- 
merly unthinkable  authority,  and  operating,  perhaps 
for  this  very  reason,  with  shining  success.  Smooth 
off  their  rough  edges,  which  are  the  result  of  hasty 
formation  and  the  exigencies  of  war — though  in 
no  case,  as  the  present  shows,  has  this  crudity  been 
unbearable — and  you  can  easily  imagine  similar 
bodies  in  times  of  peace.  Since  there  will  then  be 
no  pressing  haste,  they  can  be  still  better  organized, 
and  designed  primarily  to  keep  certain  superior  in- 
dustries located  exclusively  in  this  country.  They 
may  also  create  and  maintain  or  receive  valuable 
compensations. 

Similar  bodies  might  also  be  given  the  duty  of 
cooperating    with    the    Government    in    providing 


20      The  Future  of  German  Industrial  Exports 

against  any  possible  shortage  of  certain  raw  materials. 
These  could  be  collected  or  manufactured  directly 
by  such  bodies,  or  indirectly  at  their  order.  Just  as 
little  as  foreign  countries,  notwithstanding  all  com- 
mercial treaties,  can  be  compelled  to  buy  German 
products,  so  little  can  those  which  remain  entirely 
self-supporting  be  induced  to  supply  German  in- 
dustries with  raw  materials  which  are  not  procurable 
in  our  own  land  in  the  necessary  amount  and  quality. 

It  must  be  admitted  that  Germany's  export  trade 
— at  least  in  certain  products — can  be  stopped  if  the 
procuring  of  raw  materials  be  rendered  difficult  or 
cut  off  entirely.  Remembering  the  rings  which  in 
the  past  have  brought  under  their  thumb  the  control 
of  certain  raw  materials  in  order  to  be  able  to  manipu- 
late prices  at  will,  one  can  just  as  easily  imagine  rings 
able  to  buy  up  particular  raw  materials  because  of 
their  correspondingly  strong  financial  resources 
(perhaps  even  with  the  concealed  support  of  the 
State).  They  will  then  bring  pressure  to  bear  upon 
the  industry  of  another  country,  to  extort  certain 
concessions  which  will  be  detrimental  or  even  fatal 
to  the  latter's  industry  or  export  trade.  Where  the 
weapons  of  war  could  accomplish  nothing,  duplicity 
will  step  in  and  continue  the  conflict  under  the  token 
of  the  olive  branch  of  peace.  [Germany's  export  trade 
will  have  to  reckon  with  obstacles  altogether  beyond 
calculation  at  the  present:  it  must  therefore  be  pre- 
pared at  every  point. 

Associations  which  can  effectively  oppose  foreign 
rings  of  the  nature  mentioned  above  must  be  gotten 


Forging  the  Thunderbolt  21 

well  under  way  in  advance.  These  associations  will 
be  able  to  do  their  work  all  the  more  vigorously, 
in  proportion  to  the  firmness  of  the  cement,  which, 
in  future,  must  bind  together  all  German  industries  of 
whatever  kind  they  may  be,  A  state  of  commerce 
has  always  been  in  a  certain  sense  a  state  of  war — a 
peaceful  state  of  war,  if  one  may  use  the  word,  which 
served  peaceful  ends  as  long  as  peace  lasted,  but 
which  always  lent  itself  to  warlike  designs,  whether 
there  was  a  war  or  not.  To  be  prepared  means  to 
have  at  one's  disposal  reserve  energies  sufficient  for 
any  emergency.  German  industry  must  have  at  its 
command  invincible  powers  of  resistance  if  it  is 
to  guide  its  export  trade  into  safe  paths  and  protect 
it  against  treacherous  surprises  and  assaults.  An 
assured  supply  of  every  kind  and  amount  of  raw 
material  needed  from  foreign  countries  is  one  of  the 
preHminary  necessities  for  the  future  development  of 
Germany's  trade. 

MOBILIZING   THE    SCIENTISTS 

Where,  however,  a  buyer  finds  chauvinism  blocking 
him  when  he  tries  to  purchase  raw  materials,  he  will 
often  get  the  worst  of  the  deal,  no  matter  how  great 
his  capital.  Chauvinism  is  a  sort  of  deluded  blind- 
ness, and  when  light  is  wanting,  even  the  gleam  of 
gold  loses  its  influence.  Where  purchasing  power 
or  inducements  of  other  sorts  become  ineffective; 
where  stubborn  malice,  to  its  own  detriment,  gets 
the  better  of  reason;  there  German  science  and 
German  intellectual  resourcefulness  must  turn  the 


22 '     The  Future  of  German  Industrial  Exports 

scales,  and,  if  necessary,  bring  forth  the  requisite 
materials  from  nothing  at  all.  (A  reminder  of  the 
preparation  of  fat  and  saltpetre  by  Germany  in  the 
present  war  will  suffice  to  throw  light  upon  this  sen- 
tence.) The  power  of  the  intellect  is  supreme  and 
invincible;  in  comparison  with  it,  the  power  of  money 
fades  into  insignificance.  The  "Research  Com- 
panies'^— a  German  invention — and  the  numerous 
research  departments  and  laboratories  in  individual 
companies  can  be  looked  upon  as  guides  in  forming 
associations,  the  purpose  of  which  will  be  to  furnish 
Germany's  export  industries  with  raw  material 
when  commercial  treaties  and  capital  fail  to  bring  it 
within  reach,  in  spite  of  abundant  supplies.  These 
associations  must  develop  artificial  substitutes  for 
natural  raw  materials,  when  the  latter  might  possibly 
be  cut  off  from  German  industries.  They  must 
use  the  resources  of  science  to  bring  about  indepen- 
dence from  foreign  materials.  This  is  no  Utopian 
dream;  it  is  a  probability  of  the  immediate  future, 
and  can  be  brought  to  pass  just  as  soon  as  all  special 
interests  are  pushed  aside  and  all  activity  (as  at 
present)  directed  toward  serving  the  country — 
toward  increasing  its  might  and  strengthening  its 
power.  Independence  from  foreign  material  is,  then, 
another  factor  strengthening  the  export  trade.  We 
will  discuss  it  at  greater  length  farther  on. 

"treaties,''  a  temporary  expedient 

Associations  of  the  above-mentioned  kinds  ought 
even  now  to  be  in  process  of  formation,  so  that  they 


Forging  the  Thunderbolt  23 

can  perform  good,  timely  service  of  an  economic 
nature  in  the  peace  negotiations.  At  the  time  when 
future  commercial  treaties  are  being  drawn  up,  they 
can  render  invaluable  assistance  by  seeing  to  it  that 
German  industry  is  placed  on  an  equal  footing  with 
that  of  other  countries  and  by  getting  obstacles  out 
of  the  way  beforehand,  which  later  will  be  difl&cult 
or  altogether  impossible  to  remove. 

The  word  *^ treaty''  has  acquired  such  a  bitter 
connotation  in  the  course  of  the  months  which  have 
gone^by  since  the  outbreak  of  the  war  that  people  no 
longer  take  much  stock  in  it.  Sentimental  con- 
siderations, however,  have  no  place  in  the  hard  world 
of  business.  Commercial  treaties  will  come  again 
like  other  international  agreements  and  probably 
will  also  be  broken  again.  They  must  be  couched 
in  such  terms  that  they  bring  advantages  to  the 
export  trade  as  long  as  they  are  kept,  and  do  not 
threaten  its  existence  when,  for  a  little  variety,  they 
are  arbitrarily  abrogated.  That  is  to  say,  a  purely 
economic  (not  military)  suppression  of  the  export 
trade,  through  the  general  breaking  of  commercial 
treaties,  must  be  impossible  in  the  future.  German 
industry  must  build  its  export  trade  upon  such  a 
foundation  that  it  can  enlarge  unimpeded,  and  that 
interruptions  in  its  work  can  be  suppressed  im- 
mediately— independently  of  the  outside  world. 
Commercial  treaties  can  prevent  impediments  from 
arising,  if  the  parties  so  desire;  but  not  otherwise. 

The  export  trade  may  be  embarrassed  and  im- 
peded also  by  the  fact  that  its  goods  are  oi  German 


24      The  Future  of  German  Industrial  Exports 

origin,  and  bear  the  German  trademark,  and  that  the 
manufacturer  is  located  in  Germany  and  ships  from 
there. 

DENATIONALIZATION,   A   COMMERCIAL   MASQUERADE 

All  these  obstacles  can  perhaps  be  removed,  but 
the  most  diflScult  are  those  through  which  the  Ger- 
man character  of  the  export  product  is  visibly  and 
immediately  recognized  by  foreigners  in  general. 
Let  there  be  no  misunderstanding  on  this  point. 
German  goods  can  never  belie  their  origin  to  the 
expert  user,  because  an  ineradicable  stamp  has  been 
impressed  upon  them  by  their  two  chief  peculiarities 
— "care  in  manufacture,''  and  "complete  fitness, 
economically,  for  the  use  to  which  they  are  to  be  put." 
This  stamp  is  an  automatic  result  of  the  manufac- 
turing process  and  sets  them  well  above  the  products 
of  foreign  competitors  in  spite  of  similiarty  in  other 
respects.  The  far-sighted  manufacturer  does  not, 
of  course,  content  himself  with  the  advertisement 
thus  afforded,  since  it  reaches  only  the  man  who 
already  uses  the  goods.  He  endeavours  to  make  his 
goods  known  to  a  broader  circle  through  special 
means — propaganda — in  order  to  win  more  cus- 
tomers. 

The  usual  way  of  accomplishing  this  is  to  call]  at- 
tention to  the  name  of  the  firm,  its  location,  and  its 
trademark.  Such  advertising,  so  far  as  can  be 
judged  to-day,  will  have  anything  but  a  commenda- 
tory effect  among  the  formerly  hostile  nations,  at 
least  for  a  considerable  time  after  the  conclusion  of 


Forging  the   Thunderbolt  25 

peace.  The  mere  fact  that  the  goods  were  shipped 
from  Germany  will  be  a  drawback  if  it  is  made 
known.  We  will,  of  course,  cease  to  give  conspicu- 
ousness  to  the  German  character  of  export  products; 
judging,  however,  by  various  indications  in  hostile 
newspapers,  we  must  reckon  upon  the  use  of  appar- 
ently harmless,  but  actually  malicious  tricks,  to 
discriminate  against  German  goods.  For  instance: 
foreign  customs  officers  may  stamp  upon  them  the 
country  of  their  origin,  etc.  The  purpose  is  easy  to 
discover.  Even  if  the  first  man  to  receive  the  goods 
— for  instance,  the  wholesaler — ^wishes,  for  evident 
reasons,  to  conceal  the  place  of  origin  from  his  chau- 
vinistic customers,  to  do  so  is  to  be  made  difficult 
or  impossible  for  him  by  the  marks  impressed  by  the 
native  customs  officials.  To  meet  this  it  will  be 
difficult  to  do  anything  so  long  as  the  goods  are 
shipped  directly  from  Germany,  by  a  short  and 
uninterrupted  route,  to  save  on  freight  charges. 
In  the  course  of  time  small  unpleasantnesses  of  this 
kind  may  also  disappear  on  account  of  their  triv- 
iality. Should  the  damage  done  by  them  become 
unbearable  in  the  long  run,  then  denationalization 
of  goodsy  though  it  will  eventually  raise  the  gross 
expenses,  should  not  be  avoided;  for  the  alternative 
expedient — of  having  the  foreign  customer  take  over 
these  products  at  the  place  of  manufacture,  and 
transport  them  at  his  cost  and  risk — ^would  scarcely 
obviate  the  trouble  in  the  final  result.  What  method 
of  denationalization  will  be  feasible  we  shall  discuss 
farther  on. 


26      The  Future  of  German  Industrial  Exports 

The  objection  might  be  made  here  that  in  a  certain 
sense  we  are  giving  opportunity  for  a  game  of  **Hide 
and  Seek/*  which  would  be  incompatible  with  Ger- 
man character.  In  reaHty  this  is  not  the  case  be- 
cause, for  one  thing,  as  has  already  been  said,  Ger- 
man products  bear  within  them  their  stamp  of  origin 
which  is  as  clear  as  day  to  the  experienced  user; 
then  again,  because  it  is  not  the  German  exporter 
but  rather  the  foreign  customer,  who  must  look  out 
that  the  place  of  origin  is  kept  secret,  to  avoid  loss 
at  the  hands  of  his  own  countrymen.  Undue  em- 
phasis must  not  be  placed  at  first  upon  the  fact  that 
even  back  in  times  of  peace  a  great  many  foreign 
products  were  made  in  Germany,  and  that  sentimen- 
tal considerations  can  find  no  place  in  mercantile  life. 

The  question  of  trade-marks  will  be  somewhat  more 
difficult  to  handle  because  it  involves  property  rights 
which  for  evident  reasons  it  is  not  permissible  to 
conceal.  It  will  be  hard  to  enforce  these  rights  in 
formerly  hostile  countries.  Yet  even  in  this  case 
a  way  can  be  found  to  accomplish  whatever  is  essen- 
tial, without  much  loss.     Of  this,  more  later. 

SOOTHING    PROPAGANDA 

Now  in  all  these  cases  there  arises  at  once  the  ques- 
tion: *^What  becomes  of  that  absolute  essential  of 
the  present  day — the  propaganda  on  behalf  of  Ger- 
man goods?''  The  answer  is:  The  propaganda  is 
to  be  carried  out  in  increased  measure  even  if  in  a 
form  different  from  before,  in  a  form  which  will  not 
irritate  the  feelings  of  past  enemies — a  form  which 


Forging  the  Thunderbolt  27 

takes  these  feelings  into  account  in  determining  fu- 
ture activity.  We  must  not  forget  that,  at  the 
worst,  we  are  only  dealing  with  a  period  of  transition. 
After  it  has  passed,  "doUars-and-cents"  reasoning 
will  again  be  superior  to  the  dictates  of  emotion. 
He  who  allows  himself  to  be  guided  exclusively  by 
his  feelings  must  pay  for  it  dearly  and  in  comparison 
with  a  more  hard-headed  business  man,  finds  himself 
left  out  in  the  cold.  Sad  as  it  is,  "  dollars-and-cents  " 
policies  get  the  last  word  after  all  (as  is  to  be  seen 
in  many  cases  even  in  war — often  against  the  in- 
terests of  one's  own  country — and  much  more  often 
in  peace).  More  will  be  said  later  about  ways  of 
recasting  the  propaganda  hitherto  carried  on  in 
fortign  countries. 

In  looking  back  over  Germany's  export  trade 
during  the  last  decade,  one  can  discern  a  decided  ten- 
dency toward  founding  branch  companies  instead 
of  having  some  other  firm  or  agent  represent  the 
home  concern.  Whether  this  was,  and  whether  it 
still  continues  to  be,  the  best  safeguard  for  our  export 
trade,  are  questions  which  have  been  much  disputed. 
The  prevailing  factor  behind  this  tendency  was, 
primarily,  the  eflFort  to  divert  the  intermediate  profits 
of  the  earlier  representatives  directly  into  the  hands 
of  the  parent  firm  and  secondarily,  the  centralization 
attained  by  uniting  former  competitors  into  one 
great  firm.  This  consolidation  made  it  unnecessary 
to  have  a  large  number  of  individual  representatives. 
An  influential  role  was  played  by  the  endeavour  to 
unify  and  standardize  manufacturing  processes,  and 


28      The  Future  of  German  Industrial  Exports 

thereby  eliminate  the  practice  of  catering  to  the 
buyer's  individual  fancies — a  practice  which  had 
flourished  under  the  old  system  of  many  agents  work- 
ing independently  of  each  other.  In  those  days 
they  went  farther — they  sailed  officially  under  the 
flag  of  foreign  countries,  and  founded  "daughter- 
companies''  under  the  laws  and  citizenship  of  those 
countries. 

It  is  well  known  that  since  the  beginning  of  the  war 
legal  restraints  have  been  placed  upon  these  com- 
panies, a  proof  that  their  loyalty  was  always  looked 
upon  as  specious.  Even  after  the  removal  of  the 
restraints  the  odium  of  "hostile"  will  cling  to  these 
branch  companies — provided  of  course  that  they 
weather  the  storm  of  troubles  at  all — and  this  odium 
will  be  a  burden  to  their  activity  even  if  it  does 
not  make  it  impossible.  Business,  when  actually 
conducted  in  foreign  countries  will,  therefore,  be 
forced  to  assume  other  forms — perhaps  such  as  have 
been  used  and  discarded  in  the  past.  Consciously 
to  court  chauvinistic  opposition  over  and  above  the 
industrial  and  economic  difficulties  of  competition 
would  be  unthinkable. 

Nor  must  we  overlook  the  fact  that  industrial 
and  economic  competition  after  the  war  will  become 
distinctly  more  gruelling.  The  eyes  of  foreign  coun- 
tries will  without  doubt  have  opened  to  the  perfection 
and  efficiency  of  the  articles  and  appliances  made  in 
Germany.  Foreign  countries  have  been  shaken 
into  new  life — something  which  is  doubtless  to  be 
welcomed  in  the  interest  of  mechanical  improvement 


Forging  the  Thunderbolt  29 

and  invention.  They  will  make  every  effort,  as  is 
evident  from  the  above-mentioned  article  in  the 
English  trade-journal,  not  only  to  emancipate  them- 
selves from  German  industry,  but  also  to  overtake  it. 
Whether  they  will  succeed,  may  be  left  for  the  future 
to  decide;  certain  it  is  that  such  a  thing  would  be 
possible,  if  the  tireless  energy  of  the  Germans,  who 
understand  how  to  combine  science  and  practical 
application,  should  take  root  in  foreign  countries. 
However,  it  takes  time  for  other  peoples  to  undergo 
such  a  transformation,  which  is  equivalent  to  a  com- 
plete alteration  of  the  national  character.  This 
time  must  be  used  by  German  industry,  in  the  in- 
terest of  its  export  trade,  to  make  such  swift  and  vi- 
gorous progress,  that  in  a  purely  industrial  way  no 
overtaking  by  a  competitor  will  be  possible.  In 
order  to  overcome  the  habit  of  unnecessarily  com- 
plicating manufacturing  processes  and  thus  of  in- 
creasing costs,  we  must  pay  more  attention  in  certain 
respects  to  American  methods.  They  waste  no 
energy  on  the  individual  hobbies  of  the  consumer, 
but  teach  him  to  choose  from  among  a  few  types  the 
one  best  suited  for  him.  Hand  in  hand  with  increas- 
ing scientific  progress  and  invention  must  go  broad 
and  intelligent  standardization. 

Economic  competition,  particularly  in  the  question 
of  price-superiority,  will  then  shape  itself  so  that 
German  goods  will  have  clear  sailing,  and  the  export 
trade  can  resume  its  former  triumphal  progress,  fully 
armoured  and  unafraid.  Quality  and  price  com- 
bined are  two  factors  which  in  a  short  time  will  over- 


30      The  Future  of  German  Industrial  Exports 

come  all  opposition — even  that  of  a  chauvinistic 
nature. 

MEETING   THE    AMERICAN    MENACE 

We  must  not  conceal  the  fact  that  the  ability  of 
Germany  to  undersell  the  products  of  other  countries 
will  not  be  so  easy  to  maintain  in  the  future,  as  far 
as  the  American  competitor  is  concerned.  For  the 
enormous  profits  which  the  American  factories  reap 
through  their  unscrupulous  production  of  war  ma- 
terials enable  them  to  wipe  out  liabilities  in  a  way 
hitherto  considered  impossible.  These  profits  con- 
stitute reserves  which  they  can  fall  back  upon  with 
full  assurance,  when  striving  to  outbid  others.  To 
meet  this  situation,  organized  action  will  be  just  as 
necessary  as  was  protective  action,  in  the  case  of 
raw  materials  supplied  from  other  countries.  New 
rules  will  have  to  be  formulated  here  and  brought 
into  effect — rules  which  will  treat  the  question  not 
only  from  the  commercio-political  standpoint,  but 
from  the  standpoint  of  industry  and  industrial 
tariffs  also.  This  latter  aspect  of  the  question  will 
therefore  demand  thorough  study.  We  must  like- 
wise see  whether  tariflf  bills  can  not  be  framed  so  as 
to  facilitate  the  rapid  growth  of  the  export  trade. 
It  is  not  improbable  that  we  may  even  have  to  dip 
into  the  question  of  export  premiums  in  this  con* 
nection. 

Especial  consideration  must  be  devoted  to  capital 
in  its  relation  to  the  export  trade.  It  can  give  sup- 
port both  from  the  outside  and  from  within.     In  the 


Forging  the   Thunderbolt  3 1 

last  analysis,  our  domestic  capital  ought  only  to  go 
abroad  when  we  are  sure  to  keep  on  indefinitely 
shipping  goods  to  the  country  where  the  capital  is 
invested,  in  quantities  corresponding  to  the  amount 
of  that  capital.  The  every-day  practice  among 
capitalists  is  to  impose  only  the  condition  that  the 
level  of  the  so-called  "first  shipments'^  be  main- 
tained. This  commonly  represents  only  the  capacity 
of  the  plant  at  the  start. 

Such  demands  are  shortsighted.  The  capitalists 
at  home  ought  to  insure  close  contact  between  the 
domestic  producers  with  whom  they  have  relations, 
and  the  promoters,  especially  those  in  the  foreign 
countries.  The  export  trade  must  be  backed  effec- 
tively not  only  by  the  State  and  the  unselfish  exer- 
tions of  German  industry,  but  also  by  capital.  And 
this  capital,  it  should  be  noted,  ought  if  possible  to 
come  entirely  from  German  sources;  or  at  the  very 
least,  German  capital  should  hold  a  controUing  in- 
terest. In  so  far  as  it  participates  in  those  enter- 
prises which  advance  the  interests  of  our  export 
trade,  German  capital  should  maintain  its  individ- 
uality. It  must  prepare  the  ground  and  then  add 
strength  and  support;  it  must  form  the  foundation 
for  a  new  era  in  the  growth  of  industrial  exports. 
To  enlist  capital  in  this  work  is  a  task  of  prime  im- 
portance. 

The  foregoing  discussion  shows,  in  brief,  that: 
The  growth  and  security  of  the  export  trade  after  the 
conclusion  of  peace  will  be  dependent  on  and  influenced 
by  the  following  factors: 


I 


32     The  Future  of  German  Industrial  Exports 

1.  Adaptability  of  the  export  industry. 

2.  Attitude  of  foreign  countries. 

3.  Emigration  of  domestic  industry. 

4.  Economic  compensations. 

5.  State  protection. 

6.  Industrial  protective  unions. 

7.  Commercial  treaties. 

8.  Ways  of  denationalizing  German  goods. 

9.  Competitive  ability. 
10.  Capital. 

These  factors  as  a  whole  will  bring  about  a  satis- 
factory result  only  if  they  are  brought  into  relation- 
ship by  skilful  organization  in  such  a  way  that  they 
form  a  smoothly  running  mechanism. 

Its  motive  force  must  be  the  fixed  determination 
to  raise  the  export  trade  to  the  highest  pitch  of  suc- 
cess in  spite  of  all  obstacles,  and  there  to  maintain 
it  indefinitely. 


THE  Germans,  as  the  following 
chapter  shows,  expect  impen" 
etrable  disguise  to  be  a  leading 
feature  in  renewing  their  oversea 
business.  Their  salesmen  will  be 
trained  to  correctly  imitate  the  as- 
pect, intonation,  idiom,  and  ' 'pro- 
vincialities" of  their  customers,  and 
cleverly  to  copy  their  business 
methods  and  their  style  of  making 
packages  and  shipments. 

Allied  countries  that  refrain  from 
interference  (although  '^hypercri^ 
ticaV),  Germany  intends  to  reward 
— with  her  matchless  goods.  Those 
that  refuse  to  be  duped  are  to  meet 
* 'relen tless  re trib u tion ."  A  General 
Staff  having  determined  by  means 
of  infallible  '*  defence  statistics' '  that 
America  or  some  other  culprit  is 
neglecting  to  take  its  allotted  Ger- 
man exports,  will  order  the  ''indis- 
pensable industries,''  subsidized  by 
"economic  compensations"  to  boy- 
cott the  victim,  and  it  will  seal  the 
command  with  a,  "corrective  em- 
bargo." 


CHAPTER   THREE 

THE  CAMOUFLAGE  OF  COMMERCE 

The  Impenetrable  Disguise  of  the  Diisseldorf  Drummer — Faking 
the  Appearance  of  Friendly  Business — ^The  High  Art  of  Imita- 
tion— Relentless  Retribution  Upon  Allied  Interference — "Defence 
Statistics,"  the  Barometer  of  the  Battle — Strategic  Use  of  the 
Boycott  and  the  "Corrective"  Embargo. 

B.     Factors  Influencing  or  Controlling 
Exports 

I.     Adaptability  of  the  Export  Industry 

THE  Germans  have  always  made  it  their  busi- 
ness to  learn  the  languages  of  other  nations. 
In  this  respect,  however,  they  are  surpassed 
by  the  Swiss,  who  go  so  far  as  to  master  not  only  the 
language  itself  but  also  its  peculiarities  to  a  point 
eliminating  every  foreign  element  in  their  intonation 
and  manner  smacking  of  their  mother  tongue.  A 
German  speaks  foreign  languages  correctly,  yet  in 
such  a  way  that  his  German  extraction  at  once  be- 
trays itself. 

In  the  immediate  future  the  presence  of  anything 
*' German"  among  formerly  hostile  nations  will 
evoke  emotions  which  are  not  advantageous  for  the 
advancement  of  commercial  relationships.  Of  this 
there  can  be  no  doubt.     Germans  will  certainly  be 

34- 


The  Camouflage  of  Commerce  35 

more  careful  than  ever  not  to  give  offense.  But  in 
this  they  will  be  successful  only  if  they  take  as  a 
pattern  the  Swiss  method  in  linguistics.  Men  in 
manufacture  and  industry  must  take  care  in  future 
to  use  foreign  languages  in  the  native  way.  Atten- 
tion should  also  be  paid  to  this  subject  in  the 
schools.  Hand  in  hand  with  increased  proficiency 
in  this  direction  must  go  a  comprehension  of  foreign 
ways  and  of  foreign  nature,  in  order  to  obviate  as  far 
as  possible  all  reminders  of  the  past.  We  need  not 
fear  that  Germanism  will  suffer  because  of  this;  in 
spite  of  their  perfection  in  language  technique  the 
Swiss  never  cease  to  be  good  Swiss. 

A  fundamental  requisite  for  personal  intercourse 
with  customers^  in  the  interest  of  the  export  trade^  is  the 
use  of  foreign  languages  in  the  manner  and  idiom  of 
the  people  who  speak  them, 

FAKING   THE    APPEARANCES    OF    FRIENDLY    BUSINESS 

Correspondence  in  future  is  to  be  carried  on  in  the 
foreign  tongue,  even  if  the  correspondent  commands 
the  German  language,  in  order  to  insure  him  from 
the  very  beginning  against  unpleasantnesses  which 
might  arise  with  third  parties  from  chauvinistic 
reasons. 

More  than  ever  there  will  be  necessary  a  wide- 
spread adaptation  to  foreign  methods  of  book-keeping 
and  calculation  in  order  to  increase  exports.  Stan- 
dardization in  industry  must  not  be  carried  out  ex- 
clusively from  a  German  point  of  view;  an  inter- 
mediate way,  adapted  to  accounting  purposes,  must 


36      The  Future  of  German  Industrial  Exports 

be  found,  conforming  to  domestic  and  foreign  stand- 
ards. This  will  be  of  a  special  importance  where 
for  the  same  object  other  units  of  measure  are  in 
use  in  a  foreign  country,  and  where  methods  of  as- 
sembling, packing,  and  make-up  do  not  harmonize 
with  German  custom.  In  our  ability  to  conform 
lies  the  secret  of  success;  conformity  in  the  realm  of 
manufacture  without  loss  of  profits  is  indeed  difficult 
but  not  impossible. 

Adaptation  to  foreign  customs  in  business  and  in^ 
dustry  is  a  help  to  the  export  trade. 

THE    HIGH   ART   OF    IMITATION 

German  character  and  habits  must  not  be  altered 
in  their  essence  by  this  procedure,  still  a  foreign 
exterior  is  necessary  for  purposes  of  protection,  just 
as  the  style  and  cut  of  clothing  are  adjusted  to  the 
taste  of  the  wearer.  Stiff-necked  observance  of  old 
principles  would  have  a  harmful  effect. 

A  complete  knowledge  of  the  special  requirements 
in  foreign  industries,  mutual  elimination  of  which 
was  well  on  its  way  before  the  outbreak  of  the  war, 
is  more  than  ever  necessary,  for  it  is  to  be  feared 
that  an  unpleasant  interruption  will  take  place  for  a 
considerable  time  in  these  efforts  toward  interna- 
tionalization. If  we  succeed  in  avoiding  disagree- 
ments and  disputes  after  goods  have  been  shipped 
to  the  consumer,  it  will  be  due  to  the  careful  observ- 
ance of  foreign  requirements,  which  is  impossible 
without  a  thorough  knowledge  of  them.  For  the 
present  we  dare  not  count  upon  the  healing  influence 


The  Camouflage  of  Commerce  37 

of  time.  The  common  aim  of  all  export  activity 
must  be  to  make  the  foreign  customer  so  satisfied  in 
every  respect  that,  in  spite  of  hatred  of  Germany, 
German  manufactures  give  the  best  satisfaction. 

If  everything  distasteful  or  unpleasant  to  the  for- 
eign customer  is  eliminated,  then,  with  time,  trade 
will  grow  better  and  more  pleasant  for  the  German 
producer  also.  Every  effort  must  be  directed  toward 
allaying  the  passive  resistance  which  must  be  looked 
for  from  our  customers.  Victory  with  the  means 
of  peace  must  follow  victory  with  bloody  weapons, 
otherwise  the  latter  would  be  purposeless.  German 
efficiency  must  link  itself  with  a  conformabiHty  not 
hitherto  exercised  everjrwhere,  a  conformability 
which  meets  the  new  circumstances  brought  about 
by  War  and  Peace.  The  ultimate  purpose  is  always 
the  first  consideration,  it  decides  the  form. 

2.  Attitude  of  Foreign  Countries 

Every  hostile  move  can  be  arrested  by  an  equiva- 
lent counter  move  and  may  possibly  be  prevented 
in  future.  This  principle  always  holds  good  in  war, 
not  always  in  commerce.  It  may  be  very  useful  in 
war,  in  commerce  it  often  is  the  opposite.  For  these 
reasons  measures  of  a  hostile  nature,  or  which  can  be 
considered  as  such,  are  to  be  avoided  so  far  as  possi- 
ble. Since,  however,  long-suffering  is  commonly 
construed  as  weakness,  it  has  only  conditional  and 
temporary  justification  in  the  struggle.  If,  for  the 
sake  of  our  export  trade  after  the  war,  we  resolve 
for  our  part  to  avoid  everything  which  could  possibly 


38      The  Future  of  German  Industrial  Exports 

ofFend  the  feelings  of  our  former  enemies,  we  must 
nevertheless  not  overlook  the  fact  that  in  the  im- 
mediate future  it  will  be  absolutely  necessary  to  stand 
with  weapons  at  our  side  in  order  to  give  a  good 
account  of  ourselves  when  the  necessity  arises. 

RELENTLESS    RETRIBUTION    UPON    ALLIED 
INTERFERENCE 

Whatever  be  the  self-discipline  practised,  formerly 
hostile  States  with  which  we  are  entering  into  com- 
mercial relationship — either  by  treaties  (in  which 
case  they  are  problematical)  or  by  actual  trade — 
must  be  given  clearly  to  understand  that  every  open 
or  concealed  injury  to  our  export  trade  will  be  re- 
venged. Either  unclouded  commercial  peace  or 
none  at  all.  Manufacturers  and  men  of  industry  will 
have  to  apply  all  their  strength  to  make  good  what 
the  fury  of  war  has  destroyed.  They  will,  therefore, 
have  no  time  to  interrupt  the  intensive  work  before 
them  by  petty  warfare  and  by  combating  annoyances 
and  chicanery.  We  are  justified  in  assuming  that 
even  in  formerly  hostile  countries,  industrial  circles 
will  again  yearn  for  peace  and  for  the  well-ordered 
relationships  which  make  success  possible,  yet  it  is 
more  than  questionable  whether  they  will  be  strong 
enough  to  hold  their  ground  against  professional 
politicians  and  graftseekers. 

In  future  intercourse  of  a  commercio-political 
nature,  as  in  its  rehabilitation  and  regulation 
in  general,  we  must  observe  the  fundamental  prin- 
ciple that  commercial  treaties  are  not  weapons  for 


The  Camouflage  of  Commerce  39 

strengthening  one's  own  export  trade  at  the  cost  of 
foreign  import  trade,  but  that  in  these  treaties  are 
to  be  found  ways  of  opening  broad,  safe  paths  for 
mutual  commerce.  This  point  of  view  must  of 
course  be  shared  by  both  parties. 

The  attitude  of  a  foreign  country  toward  our  ex- 
port trade  may  be  either  of  an  official,  semi-official, 
or  private  nature,  depending  upon  how  frank  it  is  in 
reference  to  the  reasons  for  its  attitude.  Or  the 
Government  may  make  common  cause  with  private 
individuals,  and  may  systematically  avoid  revealing 
its  reasons,  so  as  to  give  Germany  as  little  basis  as 
possible  on  which  to  frame  retaliatory  measures. 
The  nature  of  the  attitude  of  foreign  countries  will 
determine  the  course  which  industry,  and  the  govern- 
mental authorities  of  Germany  who  protect  it,  will 
have  to  adopt. 

The  most  favourable  case,  one  which  for  the  time 
immediately  succeeding  the  conclusion  of  peace  is 
scarcely  to  be  expected,  would  be  one  in  which 
foreign  countries  endeavour,  in  the  interest  of  their 
own  industry,  to  give  a  free  hand  to  German  export 
trade.  This  is  more  than  the  greatest  optimist  dares 
to  hope.  Anything  better  than  it  is  certainly  out 
of  the  question.  Germany,  for  its  part,  will  of  course 
do  everything  in  its  power  to  reward  such  an  attitude 
on  the  part  of  foreign  countries,  though  the  latter 
are  naturally  inspired  only  by  the  most  practical 
considerations.  In  the  discussion  of  commercial 
treaties  there  will  be  more  to  be  said  on  this  point. 

However,  since  pessimism  is  a  safer  policy  than 


40      The  Future  of  German  Industrial  Exports 

optimism,  in  mercantile  connections,  it  is  well  to 
consider  those  cases  in  which  resistance  will  have  to 
be  reckoned  with. 

A  very  simple,  though  hardly  probable  case  might 
be  this;  that  the  formerly  hostile  countries  officially 
stopped  all  German  exporting  business  within  their 
borders  by  preventing  the  importation  of  German 
goods.  This  case  need  not  be  taken  into  account  for 
the  reason  that  the  future  treaty  of  peace  will  surely 
be  founded  upon  economic  grounds  also,  because  it 
could  not  be  agreed  to  unless  official  guarantees'^of  a 
free  hand  for  our  export  trade  were  given.  A  jealous 
and  invidious  economic  policy  on  the  part  of  foreign 
countries  was  the  cause  of  the  war;  it  can  only  be 
ended  by  correcting  that  policy.  The  watchword 
will  have  to  be:  '* Hands  off  German  export  trade 
and  an  open  door  to  it  in  every  direction."  A  com- 
plete end  must  be  made  of  false  economy  with  its 
ominous  special  favouritism  clauses  when  these  are 
directed  against  the  German  export  trade. 

Safeguards  for  Germany^ s  export  trade  must  form 
an  indispensable  \part  of  the  treaty  of  peace.  The 
latter  must  eliminate  all  special  favouritism  clauses 
that  could  possibly  be  injurious, 

A  foreign  state  can  very  easily  set  up  obstacles  to 
our  trade  in  a  semi-official  way,  especially  in  award- 
ing government  contracts.  By  its  action  in  such 
cases  it  of  course  furnishes  private  business  with  a 
cue  not  easily  misunderstood.  We  can  imagine 
such  a  ruling  as  that  no  foreign  goods  at  all  may  be 
used  in  filling  government  contracts.     Technically, 


The  Camouflage  of  Commerce  41 

regulations  of  this  sort  would  present  many  difficul- 
ties and  would  be  scarcely  enforceable.  Merely 
recall  among  other  instances  those  industries  which 
have  to  pay  tribute  to  the  German  chemical  industry 
and  those  which  could  scarcely  have  succeeded  with- 
out Germany's  delicate  instruments.  Such  regula- 
tions would  be  so  stringent  for  the  industries  of  the 
countries  in  question  that  we  are  safe  in  assuming 
that  the  State  would  wink  at  their  circumvention. 

This,  however,  does  not  settle  the  question;  Ger- 
man industry  could  not  rest  content  with  such  a 
tacit  evasion  of  foreign  laws.  Openness  was  always 
a  goal  of  the  Germans,  one  which  has  made  them 
great.  It  must  also  have  effect  here.  In  the  interest 
of  its  own  industry  every  state  will  prescribe  that 
in  state  contracts  preference  must  be  given  to  domes- 
tic articles  in  so  far  as  such  are  at  hand,  even  if  foreign 
products  could  be  had  more  cheaply  (equal  quality 
assumed).  German  industrial  circles  could  not, 
however,  countenance  further  restrictions  such  as 
that  in  manufacturing  these  articles  no  raw  material 
might  be  used  whose  origin  is  to  be  traced  back  to 
countries  with  which  the  foreign  state  had  been  at  war. 

As  a  measure  of  retaliation  we  might  forbid  the 
exportation  of  materials  which  that  state  found 
absolutely  indispensable,  thus  cutting  off  both  its 
direct  or  indirect  supply.  In  this  connection  it  is, 
of  course,  always  presumed  that  a  transplanting  of 
such  industries  to  foreign  states  will  be  hindered  by 
all  means  at  our  command  (a  matter  which  will  be 
gone  into  farther  on).     It  must  be  admitted  that  such 


42      The  Future  of  German  Industrial  Exports 

regulations  could  cause  considerable  loss  to  individual 
parties  here  at  home,  yet  here  also  the  common  good 
must  be  given  precedence  over  individual  interest. 
Special  state  indemnities  can  go  far  toward  making 
good  such  losses,  all  the  more  since  retaliatory  meas- 
ures of  this  kind  could  scarcely  be  of  long  duration 
because  they  would  become  unbearable  for  the  hostile 
state. 

Rules  of  foreign  states^  forbidding  the  use  of  material 
of  German  origin  in  state  contracts^  and  aiming 
against  the  German  export  trade^  must  be  assured  a 
swift  and  sudden  doom.  Effective  precautionary  meas- 
ures for  this  purpose  can  not  show  favour  to  individual 
interests, 

"defence  statistics,"  the  barometer  of  the 

BATTLE 

It  will  be  necessary  to  create  a  special  branch 
of  statistics,  which  will  indicate  the  comparative 
amounts  of  German  products  (both  natural  and 
manufactured)  exported  in  normal  times.  By  those 
statistics  we  can  tell  whether,  and  in  what  degree, 
the  proportionate  amounts  are  being  altered  by  the 
open  or  concealed  attacks  of  foreign  countries, 
to  the  detriment  of  one  product  or  another.  These 
statistics  must  show  at  once,  at  all  times,  whether 
certain  products  are  being  discriminated  against  by 
foreign  countries  in  favour  of  other  foreign  products 
(coming  from  an  ally)  while,  at  the  same  time,  no 
obstacles  are  placed  in  the  way  of  trade  in  other 
German   products.     By  the   kind   and   amounts   of 


The  Camouflage  of  Commerce  43 

the  various  products  listed,  it  will  be  easy  to  decide 
from  these  statistics  which  German  products  foreign 
countries  can  not  do  without,  and  for  which  others 
they  substitute  (openly  or  secretly)  the  products  of 
other  countries.  From  such  knowledge  the  possi- 
bility readily  arises  of  putting  a  stop  to  our  exporta- 
tion of  products  or  materials  which  are  indispensable 
to  the  foreign  country  in  question  and  which  must, 
in  the  main,  be  drawn  from  Germany,  until  our 
other  industries,  hitherto  in  certain  measure  boy- 
cotted, are  returned  to  their  rights.  The  export 
statistics  for  the  German  Empire,  always  compiled 
so  exemplarily  in  the  past,  must  be  somewhat  ex- 
tended according  to  the  proportional  system  in 
order  to  have  ready  at  all  times  effective  means  of 
defence  for  the  protection  of  all  branches  of  our  ex- 
port trade. 

The  uniting  of  ^'defence  statistics y^  compiled  accord- 
ing to  the  proportional  system^  with  the  export  statistics^ 
is  a  necessary  measure  for  safeguarding  the  export  trade. 

Without  going  into  so  broad  a  question,  it  may 
merely  be  pointed  out  that  imports  also  can  offer 
effective  expedients  against  hostile  actions. 

By  defensive  measures,  such  as  embargoes,  certain 
of  our  industries  which  foreign  countries  have  been 
compelled  by  necessity  to  favour  rather  than  hinder, 
may  find  their  foreign  trade  for  a  time  cut  down; 
in  other  words,  they  suffer  actual  and  material  loss 
in  order  to  make  possible  the  free  export  development 
of  other  industries.  It  will,  therefore,  be  only  just 
if  the  latter,  which  have  been  protected  at  another^s 


44      The  Future  oj  German  Industrial  Exports 

expense,  pay  an  indemnity  to  the  industry  injured 
by  the  embargo,  as  soon  as  the  normal  development 
of  their  export  trade  to  the  foreign  country  in  ques- 
tion is  again  restored.  (The  "defence  statistics" 
are  the  means  of  determining  this.)  This  amount  of 
the  compensation  will  be  determined  from  the 
comparative  figures  given  by  the  "defence  statistics." 
There  must  accordingly  be  created  a  ready  coopera- 
tion between  individual  industries  in  such  a  fashion 
that,  in  the  case  of  a  depletion  of  one  industry's 
export  trade  which  can  be  traced  back  to  hostile 
measures,  the  outflow  of  other  manufactured  pro- 
ducts desired  by  the  same  foreign  country  will  be 
throttled  to  the  disadvantage  of  that  country  until  a 
state  of  equilibrium — recognized  by  means  of  the 
"defence  statistics'*- — is  arrived  at;  the  assets  (of  a 
material  nature)  lost  in  this  way  by  the  throttled 
industry  must  be  replaced  by  the  industry  which 
has  been  benefited. 

The  various  German  industries  must  he  "brought  into 
compulsory  cooperation  for  the  purpose  of  keeping  all 
hinds  of  industrial  exports  on  a  basis  of  equality. 

Economic  and  industrial  unions  are  already  suffi- 
ciently numerous  in  Germany.  Where  it  has  not 
already  been  done,  they  must  be  centralized  in  order 
to  aid  the  State  in  whatever  defensive  strategy  may 
prove  necessary.  This  aid  can  probably  be  rendered 
most  eff'ectively  by  the  independent  compilation  of 
similar  "defence  statistics,"  for  which  the  basic 
data  might  be  supplied  by  the  chambers  of  industry 
and  commerce.     Both   kinds  of  statistics — one  of 


The  Camouflage  of  Commerce  45 

which,  naturally,  will  present  a  more  bureaucratic 
stamp,  the  other  a  more  mercantile — ^will  advantage- 
ously and  automatically  complete  each  other,  and 
will  be  suited  to  prevent  uncalled-for  action  which 
could  injure  the  general  system  of  control.  Such 
action  will  almost  always  be  traceable  to  special 
interests  which  can  be  shown  their  place  only  by  the 
authority  of  the  entire  body.  To  the  directing  com- 
mittee of  such  a  union  will  be  reserved  the  right"  of 
investigating  the  justification  of  complaints,  of 
formulating  and  proposing  to  the  Government  such 
measures  as  are  in  the  interest  of  industry  in  general, 
and  of  deciding  the  future  indemnity  quotas  which 
are  to  be  valid  for  the  industries  specially  involved — 
both  those  asking  protection  and  those  affording  it. 
From  this  union  there  will  come  a  cementing  of  the 
individual  industries,  which  will  bind  them  closer 
to  one  another  for  the  good  of  the  whole  export  trade, 
and  which  will  hold  all  the  more  firmly  because  it 
promotes  the  material  interest  of  every  single  form 
of  industry.  At  the  same  time  this  union  can  form 
the  foundation  and  the  centre  of  the  protective 
federations  to  be  discussed  later. 

State  and  industry  must  mutually  supplement  each 
other  in  providing  ways  to  extend  and  apply  the 
^^ defence  statistics J*^ 

strategic  use  of  the  boycott  and  the 
** corrective'*  embargo 

To  the  union  in  question  still  another  special 
problem  will  now  fall,  one  which  can  not  and  ought 


46      The  Future  of  German  Industrial  Exports 

not  to  be  left  to  the  State  for  solution  because  it 
might  give  occasion  for  diplomatic  complications  in 
a  sphere  in  which  industry  can  help  itself  most 
safely  and  best  (it  being  assumed  that  industry  pro- 
ceeds with  sincerity  and  determination  and  per- 
manently places  the  general  good  above  special 
interests.)  This  problem  can  and  will  probably 
present  itself  in  some  such  case  as  the  following: 
A  foreign  government  avoids  officially  and  semi- 
officially every  stand  against  Germany's  manufactur- 
ing export  trade  (an  assumption  in  no  case  justified 
at  present) ;  but  the  industry  of  that  country  takes  a 
hostile  attitude  and  only  orders  from  Germany  what 
it  absolutely  has  to,  taking  everything  else  from 
foreign  competitors.  Let  us  now  narrow  the  matter 
down  to  an  individual  case,  such  as  will  always  be 
easy  to  find,  and  simple  though  it  is,  it  will  give  a 
clue  toward  handling  any  complication. 

A  foreign  manufacturer  needs  in  his  business  two 
principal  kinds  of  raw  materials:  One  he  can  obtain 
only  from  Germany  and  the  other  he  can  get  from 
other  countries,  the  hypothesis  presupposing  equal 
quality  and  price.  In  purchasing  the  former  he 
carefully  overlooks  the  German  origin;  in  the  latter 
he  becomes  patriotic  and  rejects  every  German  pro- 
duct. It  will  be  the  task  of  the  rejected  industries 
to  collect  all  grounds  which  can  prove  such  a  proce- 
dure beyond  question.  If  upon  examining  these 
grounds  the  officers  of  the  union  find  that  there  can 
be  no  doubt  about  the  manufacturer  being  guilty  of 
boycotting,  he  will  be  prevented  by  the  union  from 


The  Camouflage  of  Commerce  47 

getting  the  German  materials  indispensable  to  him, 
even  if  he  tries  indirect  ways  such  as  through  similar 
industries  of  his  own  country.  Such  control  is  readily 
possible,  because  a  sudden  increase  in  the  demand 
for  these  indispensable  products  on  the  part  of  a 
compatriot  manufacturer  who  is  acting  as  a  go- 
between  gives  proof  that  he  is  helping  his  friend. 
He  would  then  fall  a  victim  to  the  same  fate,  as 
would  the  whole  foreign  industrial  association  in 
question,  the  destruction  of  which  in  this  way  would 
not  be  difficult. 

The  same  procedure  is  to  be  recommended  when  a 
foreign  industry  which  is  not  dependent  upon  Ger- 
man manufactures  persists  in  boycotting  German 
goods.  In  this  case  a  closely  allied  industry  which 
supplies  it — or  is  supplied  by  it,  as  the  case  may  be — 
will  have  to  feel  the  eff'ects  of  an  embargo  unless  the 
closely  allied  industry  makes  redress  in  some  internal 
way  and  brings  the  hostile  industry  to  its  senses. 
The  battle  will  again  be  fought  out  according  to  the 
approved  German  fashion  on  foreign  soil,  only  with 
the  diff'erence,  nevertheless  worthy  of  notice,  that 
both  contesting  parties  must  be  furnished  by  foreign 
countries.  Such  measures  can  be  more  easily  carried 
out  by  industrial  unions  than  by  the  State,  because 
individual  conditions  are  often  met  with,  which  can 
be  remedied  more  readily  by  private  parties.  The 
State's  embargo  mentioned  above  always  remains 
ready  as  a  powerful  reserve  for  the  attack,  whenever 
petty  warfare  degenerates  into  a  general  conflict. 

Foreign  manufacturers  who  persistently  reject  Ger- 


48      The  Future  of  German  Industrial  Exports 

man  goods  of  one  sort  can  under  no  circumstances  be 
permitted  to  get  German  goods  of  another  sort  zvhich  are 
indispensable  to  them. 

The  necessary  control  can  perhaps  be  made 
easier  if  this  principle  is  observed,  namely:  that  all 
foreign  payment  for  German  goods  received  must 
be  made  only  in  German  exchanges.  This  will 
probably  become  an  essential  stipulation  in  the  im- 
mediate future,  since  the  action  of  the  hostile  govern- 
ments toward  German  credits  will  not  be  forgotten  at 
once.  Manufacturers  and  banks  can  here  render 
each  other  mutual  and  effective  support. 


TIHJB  German  sets  forth  in 
Chapter  IV  by  what  process  he 
proposes  to  blackmail  the  world 
with  his'* Indispensable  Industries/* 
For  this  purpose  he  intends  to 
maintain  exclusive  control  of  them 
by  a  rigid  and  despotic  ''state 
sovereignty^^  expressly  adopted  to 
limit  "the  freedom  of  the  Individ" 
ual,  science,  and  property,'* 

These  strategic  industries  will 
embrace  such  natural  monopolies  as 
potash,  such  results  of  the  German 
system  as  dyestuffs  and  carbolic 
acid,  chemicals,  steels  of  special 
value  and  gelatine,  which  they 
believe  inimitable.  Beyond  these, 
such  products  as  they  have  or  can 
render  irreplaceable,  technically 
superior  and  infinitely  cheaper, 
of  a  nature  to  cause  great  econ- 
omic suffering  by  their  lack,  and 
which  can  be  made  exclusively  of 
materials  obtainable  always  in  Ger- 
many,  will  be  selected  to  constitute 
the  "Prussian  Guard''  of  their 
industrial  invasion,  and  to  be  put 
under  the  invigorating  husbandry  of 
the  Military  Regime. 


CHAPTER   FOUR 

"INDISPENSABLE  INDUSTRIES" 

Imperial  Military  Control  to  Insure  Exclusive  Possession  of 
Strategic  Industries — ^The  German  Plan  to  Eliminate  the  Free- 
dom of  Science  and  Property — Potash  a  Prussian  Monopoly — 
The  Inimitable  DyestufFs  and  Chemicals — Principles  of  the 
Embargo  Battle — Some  Definitions  of  "Indispensable** — ^Th^ 
High  Road  to  Technical  Superiority — ^An  Infallible  Price-cutting 
Device. 

3.  Emigration  of  Domestic  Industries 

ALTHOUGH  this  protection  of  Germany's 
/J^  export  trade  as  a  whole  can  probably  be 
-*-  -^  attained  by  the  methods  suggested,  and  with 
honest  effort,  yet  it  will  be  permanent  and  effectual 
only  if  the  weapons  of  protection  remain  exclusively 
in  the  possession  of  German  manufacture.  This 
stipulation  is  much  more  difficult  to  fulfil  than  ap- 
pears at  first  glance,  since  in  so  doing  the  legal 
freedom  of  the  private  individual,  of  science,  and  of 
property,  although  eventually  guaranteed  and  safe- 
guarded, is  liable  to  be  compromised,  as,  likewise,  is 
the  right  of  capital  and  trade  to  move  about  at  will. 
In  other  directions  nothing  stands  in  the  way  of 
the  fulfilment  of  this  condition  provided  that  the 
war-forged  watchword  "Our  country  first  of  all!" 
retains,  in  peace  times  also,  the  same  importance 

50 


^^Indispensable  Industries'^  51 

and  general  recognition  which  it  now  commands. 
When  put  into  practical  application  this  means: 
The  State  must  possess  the  right — even  against  the 
personal  and  material  interest  of  individuals,  com- 
panies, and  organized  businesses — to  prevent  emi- 
gration of  those  industries  whose  exclusive  continua- 
tion at  home  is  necessary  in  order  to  remove  obstacles 
which  could  oppose  the  export  trade  of  other  German 
industries.  This  right  must  be  established  by  law. 
This  law  must  define  the  position  of  the  State  toward 
these  industries  and  its  rights  and  duties  toward 
them  just  as  precisely  as  the  rights  and  duties  which 
these  industries  have  toward  the  State.  This  in- 
dispensable law  must  be  given  a  retroactive  power 
and  authority  which  naturally  will  extend  also  to 
industries  not  yet  in  existence  and  its  fundamental 
outlines  be  worked  out  now,  since  they  might  per- 
haps have  a  guiding  influence  on  the  economic  terms 
of  the  coming  treaty  of  peace. 

The  emigration  of  industries  whose  continuation  at 
home  exclusively  is  essential  to  the  security  of  the  export 
trade  of  other  industries  must  he  prevented*  A  law 
governing  this  question  is  a  necessity. 

For  preventing  the  transplanting  of  such  industries 
to  foreign  countries  the  following  topics  are  sugges- 
tive: 

1.  A  statement  pointing  out  the  distinguishing 
pecuHarities  of  those  industries  which  are  to  be  sub- 
jected to  the  State's  rights  of  special  sovereignty. 

2.  Definition  of  these  rights. 

3.  Control  of  the  operation  of  such  industries. 


52      The  'Future  of  German  Industrial  Exports 

4.  Their  rights  of  exemption  of  a  technical  nature. 

5.  State  guarantees  for  their  manufacturing  ne- 
cessities (machines  and  materials),  to  be  eventually 
at  the  expense  of  other  native  industries  in  return 
for  equivalent  services. 

6.  A  law  requiring  the  reporting  and  registration 
of  new  improvements  and  inventions. 

7.  The  drawing*^  up  of  industrial  lists  in  which  the 
proprietors  of  such  industries,  and  the  mechanics, 
foremen,  and  labourers  employed  in  them,  are 
named. 

8.  Measures  to  be  taken  in  case  of  the  transition 
of  these  industries  into  other  hands  or  in  case  of  a 
change  in  their  business  form. 

9.  A  voice  in  regulating  the  exports  of  these  in- 
dustries. 

10.  Safeguarding  the  business-  and  manufacturing- 
secrets,  from  an  industrial  and  economic  point  of 
view. 

11.  Regulation  of  wages  and  conditions  of  labour. 

12.  Regulation  of  the  participation  of  such  indus- 
tries in  foreign  industries  of  the  same  or  related 
kinds  (industries  turning  out  manufactured  or  im- 
proved articles,  and  branch  offices  of  German  com- 
panies). 

13.  Participation  of  foreign  capital  in  such  indus- 
tries and  the  composition  of  their  controlling  bodies. 

In  stating  the  characteristics  of  industries  which 
must  be  safeguarded  against  injurious  transplanta- 
tion, the  following  are  the  principal  considerations: 

Nature  of  the  manufactured  article:  Degree  to 
which  other  things  can  be  substituted  for  it;  Degree 
of  its  perfection;  Possibility  of  imitation;  Degree 
of  its  usefulness  and  indispensability;  Amount 
manufactured;  Demand  for  it;  Height  of  selling  price; 


^'Indispensable  Industries'^  53 

Dependence  upon — or,  as  the  case  may  be,  indepen- 
dence— of  foreign  raw  materials;  Nature  and  amount 
of  foreign  competition. 

In  classifying  an  article  we  should  notice  whether 
it  is  a  raw  or  a  finished  product;  whether  it  is  used 
in  agriculture  or  industry,  or  in  the  metal,  textile, 
chemical,  or,  particularly,  the  war  industry;  whether 
it  is  rapidly  worn  out  or  more  durable,  and  whether 
it  is  manufactured  in  bulk  or  by  the  piece. 

The  raw  product  may  be  of  animal,  vegetable,  or 
mineral  nature.  The  first  sort  need  scarcely  be 
taken  into  consideration.  The  second  sort  may, 
perhaps,  be  considered  conditionally  in  cases  in 
which  are  involved  vegetable  materials  which  form 
the  foundation  of  special  industries  and  which  are 
handled  in  colonial  business. 

POTASH   A   PRUSSIAN    MONOPOLY 

Among  mineral  raw  materials,  the  most  important 
will  be  certain  salts  necessary  in  agriculture.  After 
them  come  certain  kinds  of  iron,  bronze,  and  coal, 
in  connection  with  specific  countries.  The  impor- 
tance of  controlling  the  latter  may  perhaps  be  in- 
fluenced by  future  territorial  settlements.  Those 
raw  products  which  are  obtained  by  the  use  of 
chemicals,  however,  will  be  of  very  special  importance. 
Thanks  to  the  marvellous  development  of  German 
science,  they  assure  a  monopoly  to  German  industry 
— a  monopoly  the  use  of  which  is  of  great  importance. 
The  experiences  of  the  war,  thus  far,  have  given 
in  this  very  connection  an  incontrovertible  proof  of 


'54      The  Future  of  German  Industrial  Exports 

r 

the  absolute  dependence  of  the  foreign  countries  upon 
Germany.  To  make  this  dependency  permanent  and 
certain  will  be  one  of  the  most  important  problems 
connected  with  the  prevention  of  transplantings. 

In  protecting  our  export  trade^  raw  products  of 
German  origin^  which  are  indispensable  for  the  foreign 
countries  in  question^  are  to  he  made  use  of.  These 
raw  products  must  he  placed  under  State  control  through 
its  rights  of  special  sovereignty. 

THE    INIMITABLE    DYE-STUFFS    AND    CHEMICALS 

The  classification  of  finished  products  will  be 
somewhat  more  difficult,  since,  with  few  exceptions, 
the  dependency  of  foreign  countries  upon  them  is 
not  always  easy  to  prove.  In  these  exceptions  are 
included,  briefly,  certain  dye-stuff^s  and  chemicals 
of  an  industrial  and  pharmaceutical  nature;  certain 
steels  of  especial  value;  also  some  kinds  of  gelatin. 
The  dependency  of  foreign  countries  can,  of  course, 
be  only  a  conditional  one,  resting  upon  their  in- 
ability to  turn  out  goods  of  equally  high  value.  This 
is  especially  true  in  reference  to  machines  and  ma- 
chine parts,  which  enjoy  the  protection  of  special 
patents.  The  objection  that  foreign  countries, 
in  such  cases,  simply  would  either  not  regard  the 
patent  right  or  else  entirely  extinguish  it,  is  scarcely 
justified,  since  without  doubt  recourse  would  be  had 
to  reprisals  in  the  matter  of  patent  rights  and  these 
reprisals  would,  of  course,  be  made  where  the  foreign 
industry  would  suflFer  in  an  especially  vulnerable  spot. 
Observe  that  an  embargo  on  raw  products  can  be 


'' Indispensable  Industries'^  55 

of  effect  on  either  an  agricultural  or  an  industrial 
connection;  an  embargo  on  finished  products  will 
generally  be  of  effect  only  in  an  industrial  connection. 

Finished  products  of  German  origin  are  considered 
for  purposes  of  protecting  the  export  trade — primarily^ 
if  they  are  absolutely  indispensable  for  the  foreign 
country  in  question;  secondarily^  if  they  are  partially 
indispensable, 

PRINCIPLES   OF   THE    EMBARGO   BATTLE 

What  kind  of  article  is  to  be  chosen  in  arranging 
protection  for  certain  exports  depends  upon  the 
industry  which  is  the  predominant  and  prevailing 
factor  in  the  economic  life  of  the  country  in  question. 
Manufactures  that  wear  out  rapidly  will  be  less 
adapted  for  protective  uses  than  those  of  a  permanent 
nature.  An  embargo  on  perishable  articles  is  more 
or  less  equivalent  to  a  sudden  crippling  of  the  indus- 
try, and  like  every  unforeseen  business  cessation  is 
attended  with  heavy  economic  sacrifice;  and  there  is 
also  danger  that  the  embargoed  goods,  to  an  amount 
corresponding  to  previous  export,  will  spoil  in 
default  of  sale.  An  embargo  on  durable  articles 
will  only  very  rarely  be  followed  by  serious  economic 
loss.  The  plant  can  continue  operation  at  full 
capacity  and  its  output  stored  as  a  surplus,  and 
the  longer  the  embargo  lasts,  the  greater  will  be  the 
demand  when  it  is  lifted. 

Perishable  articles  are  inferior  to  durable  articles  in 
respect  to  their  protective  value  \  manufactures  in  bulk 
are  superior  to  piece  manufactures. 


56      The  Future  of  German  Industrial  Exports 

A  presupposition  in  the  case  of  all  raw  materials 
and  articles  which  are  used  in  protecting  exports  is 
their  irreplaceability  in  a  material  and  qualitative 
connection.  Chemical  and  mechanical  composition 
is  an  important  factor  here,  as  well  as  physical, 
chemical,  and  mechanical  peculiarities,  such  as  their 
action  when  combined  with  other  substances.  Up 
to  a  certain  limit  of  effectiveness  all  raw  materials 
and  manufactured  articles  can  be  replaced  by  others; 
the  relative  height  of  this  limit,  from  an  economic 
standpoint,  determines  the  possibility  of  substitu- 
tion. When  this  limit  is  ascertained,  we  have  a 
clue  to  the  value  of  the  raw  material  or  manufac- 
tured article  as  a  means  of  protection  for  exports. 
But  this  limit  of  effectiveness,  measured  indepen- 
dently, is  not  the  determining  factor.  The  principal 
element  is  the  item  of  price.  There  are  substitutes 
for  the  regular  materials  which  are  only  half  as 
efficient,  but  which  are  four  times  as  cheap.  Such 
substitute-materials  give  the  foreign  country  suffi- 
cient superiority  to  rob  the  normal  material  of  its 
protective  properties.  Raw  materials  and  manu- 
factured articles,  accordingly,  are  to  be  considered 
as  irreplaceable  whose  physical,  chemical,  and 
mechanical  properties — independent  of  other  con- 
siderations— can  not  be  rivalled  by  substitutes  at  all; 
secondly,  those  which  can  not  be  rivalled  in  the 
matter  of  price;  and  finally,  those  which,  when 
measured  from  the  standpoint  of  economics,  show  a 
superiority  not  to  be  overtaken. 

Protective  means  for  the  export  trade  can  only  be 


^^Indispensable  Industries^'  57 

raw  materials  whose  degree  of  effectiveness — absolute 
and  relative — can  not  be  rivalled  by  substitutes, 

SOME    DEFINITIONS    OF    "INDISPENSABLE*' 

The  degree  of  excellence  can  come  into  question 
only  in  the  case  of  improved  raw  products — ^which 
in  the  broader  sense  of  the  word,  represent  manu- 
factured articles — and  in  actual  articles  of  manufac- 
ture. At  that  it  is  only  a  relative  matter  and  depends 
upon  the  degree  of  excellence  attained  by  the 
products  of  the  competing  foreign  country.  The 
more  our  products  surpass  the  latter,  the  greater  will 
be  their  protective  value.  In  estimating  the  degree 
of  excellence  of  an  article,  we  consider  first,  of  course, 
its  good  qualities.  Then  we  consider  the  readiness 
with  which  it  can  be  put  into  service,  and  finally  its 
total  efficiency.  The  less  the  deterioration  (in 
actual  manufactures),  the  greater  the  productivity 
(in  improved  raw  products),  the  longer  the  duration, 
the  more  versatile  the  application,  the  higher  will  be 
the  degree  of  excellence  which  represents  the  sum 
total  of  these  properties.  This  degree  of  excellence 
determines  at  the  same  time  the  degree  of  usefulness. 

Protective  materials  for  the  export  trade  must  show  a 
superior  degree  of  excellence  and  usefulness. 

Special  make,  irreplaceability,  perfection,  and 
usefulness  of  (raw  materials  or)  manufactured  arti- 
cles are  of  no  avail,  if  there  is  a  reasonable  probability 
that,  with  all  these  peculiarities,  they  could  be  imi- 
tated in  a  comparatively  short  time.  On  account 
of  the  constant  advance  of  technical  skill  and  indus- 


58      The  Future  oj  German  Industrial  Exports 

trial  resourcefulness  therewith,  there  is  no  use  talking 
about  the  "impossibility'*  of  practical  or  equivalent 
imitation.  Inventions  overtake  each  other  more 
quickly^than  they  can  be  perfected.  Merely  theoreti- 
cal imitation  of  course  holds  no  terrors  for  us.  For 
from  theoretical  imitation  to  practical  performance, 
under  the  conditions  of  competition,  is  a  far  cry, 
and  demands  hardly  less  time  and  money  than  were 
required  for  the  development  of  the  original  article. 

Here  also  there  can  accordingly  take  place  only  a 
relative  valuation  of  our  articles  for  export  pro- 
tection. The  chief  criterion  will  not  be  of  a  financial 
but  of  a  temporal  nature,  and  the  possibility  of  an 
imitation  being  turned  out  will  always  be  presup- 
posed. This  presupposition  must  be  retained  and 
must  influence  the  selection,  even  if  for  the  instant 
there  is  no  such  possibihty  evident.  To  deny  it 
would  be  to  call  mechanical  improvement  an  im- 
possibility. Capital  can  always  be  provided,  even 
in  advance,  in  case  of  assured  profit.  Mechanical 
improvement  can  almost  always  be  obtained  where 
broad  and  alluring  advantages  are  offered  in  return. 
When  time  is  short,  it  must  be  used  up  wherever  a 
minute  can  be  found.  The  greater  the  element  of 
time,  the  smaller  becomes  the  economic  success 
of  an  imitation,  and  the  larger  the  protective  value 
of  the  manufacture  which  is  to  be  imitated.  The 
time  necessary  for  imitation  assures  the  original 
article  an  economic  and  commercial  start  which  puts 
it  out  of  subsequent  danger.  Then  too,  this  respite 
can  be  used  in  perfecting  the  original  article  still 


"Indispensable  Industries''  59 

more,  further  handicapping  the  imitation  in  the 
economic  race. 

In  determining  the  protective  value  of  a  manufactured 
article  in  respect  to  the  possibility  of  its  being  imitatedy 
the  deciding  factor  is  the  time  required  for  contriving 
the  imitation. 

Raw  materials  and  manufactured  articles  which 
are  dispensable  under  favourable  economic  circum- 
stances are  not  considered  as  protective  means  for 
industrial  exports.  If  to  do  without  them  causes 
economic  loss  to  the  country  in  question,  then  these 
raw  materials  and  manufactured  articles  are  truly 
indispensable. 

It  is  self-evident  that,  as  protective  means  for  the 
manufacturing  export  trade,  only  such  raw  materials 
and  manufactured  articles  can  be  used,  the  demand 
for  which  and  the  corresponding  output  of  which 
form  a  very  considerable  proportion  of  the  entire 
consumption  of  the  foreign  country  to  which  they 
are  shipped. 

Here  there  should  be  noticed  a  still  further  limita- 
tion, namely:  a  large  manufacturing  output  or  foreign 
demand  represents  an  influential  economic  factor 
only  when  the  selling  price  of  the  unit  of  goods  is  as 
high  as  it  should  be,  considering  the  amount  of 
I  output.  Expressed  in  other  words  that  means: 
The  product  given  by  multiplying  the  output  shipped 
abroad  by  the  selling  price  must  be  a  figure  which 
is  larger  than  a  certain  percentage  of  the  entire 
value  of  the  exports  to  the  foreign  country  in 
question.     This  deciding  percentage  will  be  diflPer- 


66      The  Future  of  German  Industrial  Exports 

ent  for  each  foreign  country  for  it  is  dependent  upon 
the  other  exports.  In  one  case  it  will  have  to  be 
very  large  before  admitting  of  protective  measures 
without  injury  to  the  rest  of  the  export;  in  another 
case  it  can  be  comparatively  small.  It  must  always, 
however,  be  adjusted  so  as  to  leave  such  an  amount  as 
will  allow  other  industries  which  may  in  time  be- 
come involved,  to  be  maintained  without  loss. 

Protective  value  can  he  attributed  only  to  those  raw 
materials  and  articles  whose  output  jor foreign  countries^ 
and  whose  selling  price  amount  to  a  figure  of  consider- 
able importance  in  the  total  export  statistics  for  those 
countries. 

To  manufacture  certain  articles  in  Germany,  we 
shall  have  to  have  foreign  raw  materials;  for  certain 
others,  we  shall  not.  Manufactures  which  are  de- 
pendent upon  a  supply  of  foreign  raw  materials 
(German  over-seas  colonies  taken  as  part  of  the 
mother  country),  can  be  considered  as  means  of 
protection  only  in  two  cases,  namely:  when  the  land 
of  supply  is  well  disposed  toward  us  (a  case  upon 
which  we  dare  not  count  too  strongly,  as  experience 
teaches),  or  when  it  is  possible  to  manufacture  un- 
surpassable products  from  these  raw  materials  in 
Germany  alone. 

The  deciding  factors  here  will  be:  working  methods, 
secret  processes,  and  also  groups  of  employees  whose 
trade  is  handed  down  from  father  to  son,  and  who 
are  certain  not  to  be  transferred  to  other  countries. 
The  above-mentioned  limitations  will  closely  limit 
this  class  of  protective  articles,  and  will  make  it 


^^Indispensable  Industries'^  6i 

smaller  than  that  of  manufactured  articles  indepen- 
dent of  foreign  raw  materials.  The  importance  of 
the  latter  is  evident  without  further  discussion. 
The  chemical  industry  and  the  metal  industry  will 
here  stand  in  the  first  place.  Next  to  them  will 
come  the  manufacture  of  deUcate  instruments,  a 
field  where  science  is  continually  progressing. 

Manufactures  independent  of  foreign  raw  materials 
have  a  higher  productive  value  than  those  dependent 
upon  them, 

THE  HIGH  ROAD  TO  TECHNICAL  SUPERIORITY 

Finally,  the  amount  and  kind  of  foreign  compe- 
tition is  a  factor  determining  protective  value.  The 
greatest  protective  value  is  afforded  by  those  raw 
materials  and  manufactures  which  are  superior  to 
the  foreign,  both  in  quality  and  quantity.  By  su- 
periority in  quaUty  we  are  to  understand  technical 
superiority  (good  quaUties,  durabiUty,  efficiency, 
productivity,  etc.)  as  well  as  price  superiority  (cheap- 
ness, taken  absolutely  and  also  in  proportion  to 
technical  superiority).  For  this  reason,  all  imagin- 
able measures  are  to  be  taken  to  increase  technical 
and  price  superiority,  not  only  on  behalf  of  manu- 
facturers but  much  more  still  for  the  sake  of  increas- 
ing protective  value. 

Technical  superiority  finds  advancement  through 
state  scientific  institutions,  schools,  research  organiz- 
ations, prizes  offered  for  perfected  articles  and  im- 
provements. It  finds  it  in  a  larger  share  of  profit 
for  the  inventor  in  comparison  with  the  head  of  the 


62      The  Future  of  German  Industrial  Exports 

business;  reduction  of  the  cost  of  government  tests 
in  order  to  bring  them  within  the  reach  even  of  in- 
dustries weak  financially,  research  work  done  without 
charge  when  circumstances  warrant  it,  state  aid  to 
private  institutions  for  research  and  experimental 
laboratories  under  certain  restrictions,  state  encour- 
agement of  private  inventive  activity  by  financial 
support,  state  benefit  and  support  for  professional 
unions,  and  through  these  unions  themselves.  Spec- 
ial value  is  to  be  placed  upon  the  continued  main- 
tenance of  vital  contact  between  scientific  investigation 
and  practical  application;  in  other  words,  scientific 
improvements  ought  to  be  made  accessible  to  indus- 
try as  a  whole  not  only  through  private  trade- 
literature,  but  also  through  hterature  under  state 
patronage. 

AN    INFALLIBLE    PRICE-CUTTING   DEVICE 

Price  superiority  is  increased  by  safeguarding 
general  labour  conditions  with  reference  to  relations 
between  employer  and  employee,  as  well  as  to  raw 
materials  (pre-manufactures)  and  machinery.  Un- 
reasonable advances  in  the  prices  of  raw  materials 
(pre-manufactures)  due  to  rings  and  special  interests, 
must  be  prevented  by  state  measures,  where  they 
might  endanger  the  protective  value  of  manufactures. 
The  present  times  are  showing  that  state  interference 
of  this  sort  is  possible  and  can  be  successfully  carried 
out.  The  experiences  of  to-day  in  this  connection, 
ought  to  bear  fruit  in  peace  times  also.  There  must 
be  no  hesitation  about  applying  compulsion  in  cases 


^^Indispensable  Industries^'  63 

where  selfish  interests  of  individuals  or  groups  could 
injure  the  German  export  trade  or  parts  of  it.  Ac- 
cordingly, it  is  plain  that  certain  raw  materials  and 
pre-manufactures,  which  are  closely  related  to  export 
articles  having  a  protective  value,  must  be  subject 
to  state  supervision  at  least  so  far  as  price  goes. 

Many  industries  and  industrial  enterprisers  fall 
behind  the  times  in  the  matter  of  price  (to  a  certain 
degree  often  in  construction  also),  because  their 
momentary  financial  situation  makes  it  impossible 
to  procure  more  efficient  machinery.  This  condition 
will  be  especially  annoying  in  the  time  immediately 
following  the  making  of  peace.  It  might  well  be  a 
subject  study,  whether,  with  state  assistance — no 
matter  whether  this  benefited  the  enterpriser  directly, 
or  the  trade  association  to  which  he  belonged — ^ways 
could  not  be  found  to  remedy  this  evil,  perhaps 
through  replacing  the  machinery  in  return  for  certain 
obligations  which  would  be  payable  in  cash  or  in 
output.  This  assistance  will  be  particularly  neces- 
sary where  eflFective  protective  value  can  not  be 
gained  until  the  industry  in  question  maintains 
a  certain  minimum  efficiency  in  the  amount  of  output. 

Industries,  whose  products  are  to  have  a  protective 
value  which  will  benefit  the  German  export  trade, 
must  be  and  remain  superior  to  the  corresponding 
foreign  industries  in  the  matter  of  machanical  con- 
structiony  price,  and  capacity. 


/N  ORDER  to  strangle  any  pos- 
sible competition  by  the  United 
States  and  her  Allies  in  the  pro- 
duction of  those  ''unsurpassable 
goods'^  with  which  she  is  to  throttle 
us  eventually,  the  Germans  are  to 
incorporate  all  their  export  Indus- 
tries  into  a  "union"  under] military 
control.  And  this  union  will  levy 
contributions  from  all  its  members 
for  a  ''guarantee  fund."  The  Guar- 
antee Fund  will  "insure"  that  these 
strategic  goods  undersell  all  possible 
competitors.  For  while  the  State 
provides  the  constant  supply  of  raw 
materials,  below  cost,  the  fund  Hows 
in  to  reimburse  the  miner,  and  fi- 
nance the  hiatus  caused  by  the  "piti- 
less embargo"  and  maintain  the 
surplus  stocks  for  future  offensive 
manoeuvres.  Besides,  the  indispens- 
able industries  will  never  be  ham- 
pered, as  ours  are,  by  the  demands 
of  labour.  Strikeis,  the  writer  here 
says,  are  "unthinkable" in  thiscam- 
paign,  and  will  be  met  by  swift  and 
terrible  retribution. 


CHAPTER  FIVE 

THE  GOLDEN  GUARANTEE  AND  THE 
DISCIPLINE  OF  LABOUR 

The  Fusion  of  German  Business  and  the  German  Army — ^The 
Benevolence  of  State  Supervision  of  Industry— Raw  Material,  the 
Tale  of  Available  Ammunition — Surplus  Stocks,  the  "Reserves" 
of  the  Trade  War — Subsidies  and  Compensations — Levying 
Contributions  on  All  Business — ^The  Guarantee  Fund — Cheap 
Materials — ^The  Composition  of  the  General  Staff — Crushing 
"Unthinkable''  Labour  Disputes — Stopping  Leaks  to  the 
Blacklist. 

IT  WILL  now  be  the  duty  of  the  state  officials  in 
charge  of  the  welfare  of  the  export  trade  to  sep- 
arate the  individual  German  industries,  on  the 
basis  of  detailed  studies  and  deliberations,  into  those 
with  direct  protective  value,  and  those  with  indirect 
protective  value,  and  to  issue  for  the  benefit  of  those 
industries  and  their  service  to  our  export  trade 
administrative  regulations,  the  guiding  lines  of 
which  have  been  given  in  the  foregoing  discussion. 
The  special  industries  must  recognize  that  they  work 
not  only  on  their  own  account  but  for  the  general 
good,  that  their  own  interest  must  give  way  to  the 
protection  of  the  whole  German  export  trade. 

Certain  special  rights  must  be  given  the  State  by 
law  to  prevent  industries  of  special  protective  value 

66 


The  Golden  Guarantee  and  Discipline  of  Labour    67 

from  being  transplanted  into  foreign  countries, 
when  such  a  transfer  would  impair  or  destroy  their 
protective  value.  These  rights  can  be  defined  by 
law  only  in  a  general  way;  they  must  furnish  the 
guiding  lines  for  the  decisions  to  be  issued  in  the 
form  of  rules  and  regulations.  They  must  on 
the  other  hand  be  so  worded  that  a  gag  or  check 
upon  industrial  development  or  upon  the  indispen- 
sable opportunity  for  free  expansion  is  just  as  com- 
pletely precluded  as  a  "bureaucratizing'^  in  the 
damaging  sense  of  the  word.  In  no  circumstances 
may  fetters  be  laid  upon  industry;  the  state's  rights 
of  special  sovereignty  should  have  the  end  of  promot- 
ing industry  in  greater  measure  than  previously. 
Claims  to  such  special  help  can  be  made  only  by 
industries  which  are  suited  to  protect  the  entire 
export  trade  against  outside  hostility  of  every 
sort.  State  surveillance  is  not  to  be  called  upon, 
but  state  protection.  The  State  must  have  the 
right  of  cooperating  with  industry,  not  of  interfering 
with  it.  What  we  need  is  not  a  favouring  of  special 
industries  but  a  safeguarding  of  industry  as  a  whole 
against  the  special  interests  of  individual  industries 
which  could  only  be  satisfied  to  the  detriment  of 
industry  in  general  and  therewith  of  the  whole 
export  trade. 

BENEVOLENCE    OF    STATE    SUPERVISION 

According  to  earlier  explanations  certain  categories 
of  industries  are  to  be  subjected  to  state  protection. 
This  carries  with  it  a  state  right  of  supervision  which 


68      The  Future  of  German  Industrial  Exports 

should  be  carefully  defined,  and  which  can  be  en- 
larged in  certain  important  cases  to  give  the  State 
a  voice  in  the  industry's  dehberations.  At  the 
same  time,  however,  it  assures  to  the  industry  in 
question  special  certain  privileges  which  will  be  dis- 
cussed farther  on.  With  the  cooperation  of  com- 
petent industrial  and  technical  associations  it  will 
not  be  difficult  to  find  a  middle  path,  which  giv^^s 
to  the  State  all  the  rights  necessary  for  the  protection 
and  profit  of  industry  as  a  whole,  and  which  gives 
to  industry  that  freedom  of  development  without 
which  it  can  not  continue,  and  without  which  an 
increase  in  efficiency  is  unthinkable.  The  war  times 
have  lent  a  rejuvenating  impulse  to  an  ofttimes 
somewhat  cumbrous  bureaucracy,  an  impulse  origin-* 
ating  from  industry;  the  latter  itself,  in  cooperating 
with  government  authorities  has  learned  to  under- 
stand their  way  of  thinking  and  their  good  purposes. 
A  mutual  evening-up  of  opinions  has  taken  place 
between  officials  and  practical  men  of  affairs,  whose 
views  could  not  always  be  harmonized  in  the  past. 

This,  as  experience  teaches,  gives  promise  of  splen- 
did results.  Such  an  assimilation  was  necessary,  and 
was  the  best  imaginable  preparation  for  the  coming 
work  of  peace  and  for  the  future  of  industrial  exports. 
The  times  are  now  past  when  officials  on  the  one  side, 
and  men  of  industry  on  the  other  insisted  selfishly 
on  their  prerogatives  and  were  unwilling  to  listen 
to  the  other  side  of  the  question.  Under  the  stress  of 
circumstances  both  have  learned  to  understand  each 
other  and  have  seen  that  only  in  tolerant  cooperation 


The  Golden  Guarantee  and  Discipline  of  Labour    69 

can  they  arrive  at  what  has  made  Germany  so  great, 
to  the  terror  of  her  opponents.  Two  forces,  once 
divergent,  have  been  welded  and  transformed  into 
one  unconquerable  and  ever-increasing  power.  Its 
goal  is  the  enduring  security  of  the  country *s  future. 
Hence  there  is  no  ground  for  the  plea  that  these  plans 
call  for  police  oppression  of  industry.  Rather  do  they 
call  for  a  firm  cementing  of  two  mighty  powers. 

Industries  which  have  protective  value  for  the  export 
trade  are  to  be  given  State  protection. 

RAW   MATERIAL — THE    TALE    OF   AVAILABLE 
AMMUNITION 

In  [order  that  the  State  may  at  all  times  take  a 
stand  against  eflPorts  hostile  to  its  export  trade,  it 
should  be  fully  aware  of  the  means  at  its  disposal. 
It  must  accordingly  be  kept  well  posted  concerning 
the  regular  output  of  the  industries  which  have  pro- 
tective value.  The  within-defined  control  of  amounts 
of  yield  from  raw  materials,  and  of  amounts  of  out- 
put in  the  case  of  improved  materials  and  manufac- 
tured articles,  will  be  most  easily  made  possible  by 
«-  the  rendering  of  periodic  production-  and  manufac- 
turing-reports. The  State  must  know  what  amounts 
of  a  manufacture  or  of  a  material  it  has  at  its  dis- 
posal if  it  is  to  take  its  measures  quickly.  It  has 
already  been  indicated  that  some  action  against 
domestic  exploitation  might  also  become  necessary. 
Price  advancing  can  easily  be  prevented  for  the  pro- 
tection of  other  industries  concerned  in  export,  if 
the  quantities  on  hand  are  exactly  known.     Measures 


70      The  Future  of  German  Industrial  Exports 

against  foreign  countries  will  be  attended  by  success 
only  if  the  State  can  count  upon  assured  quantities. 
Assurance  in  all  cases  presupposes  control. 

State  protection  places  upon  industries  of  protective 
value  the  duty  of  reporting  their  amounts  of  production. 

SURPLUS    STOCKS,    THE    " RESERVES"    OF   THE    TRADE 

WAR 

It  has  been  explained  that  the  size  of  output  can 
influence  the  protective  value  of  the  products  in 
favourable  or  unfavourable  fashion.  The  mainten- 
ance of  protective  value  unimpaired  demands  a 
certain  minimum  output.  Therefore,  in  times  of 
strong  market,  but  still  more  in  times  of  a  bad  market 
we  must  take  care  that  a  certain  supply  is  on  hand 
which  can  be  thrown  into  the  balance  at  a  given 
instant.  Out  of  this  consideration  arises  the  ne- 
cessity of  certain  industries  maintaining  a  surplus 
stock  above  the  normal  needs  of  trade.  The  amount 
of  surplus  required  will  be  determined  by  the  statis- 
tics. Since  work  upon  surplus  stock  is  attended  by 
financial  sacrifice  for  industry  at  many  periods  of 
time,  the  State  must  make  a  corresponding  return 
for  this.  For  it  does  not  wish  to  give  up  the  weapon 
represented  by  the  surplus  stock,  and  yet  the  in- 
dustry is  to  be  protected  from  loss.  The  industrial 
enterpriser  will  understand  how  to  turn  out  the  sur- 
plus stock  to  the  amount  demanded  by  the  State 
without  further  directions,  if  the  State  gives  him  the 
necessary  guarantees  of  sale,  and  assists  him  finan- 
cially by  granting  advances  of  money,  when  neces- 


The  Golden  Guarantee  and  Discipline  oj  Labour    71 

sary,  upon  the  amount  of  surplus  stock.  By  these 
advances  the  resources  of  the  State  will  not  be  taxed, 
for  the  surplus  demanded  as  a  reserve  results  in 
safeguarding  the  trade  of  other  forms  of  industry 
whose  export  would  be  impossible  without  the  pro- 
tection of  the  State.  The  guarantees — through 
state  channels — are  therefore  to  be  furnished  by  the 
industries  given  protection,  for  they  form  an  insur- 
ance of  these  industries.  Moreover,  they  are  not 
actually  paid  out.  For  after  the  embargo  is  raised 
the  industries  affording  the  protection  can  again  dis- 
pose of  their  stock  and  pay,  back  the  advances  they 
have  received.  These  advances  then  flow  back — again 
through  state  channels — to  the  protected  industries. 

The  Statey  relying  for  funds  upon  the  industries 
needing  protection^  ought  to  set  aside  a  guarantee  fund. 
The  purpose  of  the  latter  would  be  to  make  temporary 
compensation  for  the  loss  {for  instance  through  keeping 
a  stock-surplus^  sustained  by  industries  which  exercise 
protective  influence  in  the  interests  of  industries  needing 
protection. 

SUBSIDIES   AND   COMPENSATIONS 

It  has  been  pointed  out  heretofore  that  protective 
value  increases  the  more  the  products  can  compete 
in  the  matter  of  price,  this  is  especially  vital  in  pre- 
venting cheap  substitutes  at  the  disposal  of  foreign 
countries  from  coming  into  competition.  It  follows 
that  the  State  must  take  care  that  a  reduction  in 
price  is  possible.  It  would  not  only  have  the  duty 
of  stepping  in  when   firms  combine  to  boost  the 


72      The  Future  of  German  Industrial  Exports 

prices  of  raw  materials  in  their  own  interests  alone, 
but  it  would  also  have  to  attend  to  the  establishment 
or  the  expansion  of  such  concerns  as  bring  about  a 
cheapening  of  products  having  protective  value. 
Effective  measures  can  here  be  taken  either  by  the 
erection  of  state  plants  or  by  state  contributions  to 
private  ones.  In  either  case  the  outlay  should  be 
gradually  refunded,  without  hindering  the  prosperity 
of  the  new  industry.  With  such  plants  it  is  not  a 
matter  of  prime  importance  that  their  work  be 
directly  profit-bearing,  but  rather  that  they  furnish 
to  the  industries  having  protective  value  the  neces- 
sary raw  material  at  prices  which  enable  them  to 
stand  at  all  times  in  the  forefront  so  far  as  price  is 
concerned.  These  auxiliary  industrial  plants  must 
of  course  also  yield  profits.  Supposing  that  they 
deliver  materials  at  cost,  they  will  then  earn  a  profit 
by  a  percentage  share  in  the  net  earnings  of  their 
customers.  This  share  under  certain  circumstances 
may  amount  to  so  large  a  sum  that  it  will  be  just  as 
possible  (even  if  a  slow  process)  for  these  state  auxili- 
ary plants  to  pay  for  themselves  as  it  is  for  the  state 
subsidies  to  private  institutions  to  be  paid  back. 

LEVYING   CONTRIBUTIONS   ON  ALL   BUSINESS 

Still  another  way  leading  to  the  same  goal  is 
possible.  Mention  has  been  made  above  of  a  guar- 
antee fund  which  had  reference  to  an  individual 
industry.  There  will  be  as  many  such  guarantee 
funds  as  there  are  at  hand  industries  of  protective 
value,  or,  as  the  case  may  be,  of  industries  to  be 


The  Golden  Guarantee  and  Discipline  of  Labour    73 

protected.  Since  industry  as  a  whole,  and  the  in- 
dividual kinds  of  industry  represent  a  smoothly 
running  machine  every  part  of  which  contributes  to 
uninterrupted  operation,  or,  in  other  words,  cooper- 
ates in  safeguarding  the  entire  export  trade,  a 
centralization  of  all  the  individual  guarantee  funds 
— ^the  formation  of  a  general  guarantee  fund — ^will  be 
expedient.  The  latter  in  accordance  with  some 
system  would  have  the  duty  of  making  up  the  in- 
dividual guarantee  fund  which  would  exist  only  as 
a  matter  of  form. 

•  If  industries  with  protective  value  need  the  cost 
of  their  raw  materials  reduced,  in  order  to  enable 
them  to  sell  at  better  prices,  the  general  guarantee 
fund  could  take  care  of  that.  Even  in  that  worst 
case  of  all,  where  the  auxiliary  industries  had  to 
supply  materials  for  this  purpose  at  a  loss  to  them- 
selves, they  would  still  be  supported  by  the  general 
guarantee  fund,  thus  being  assured  a  proper  percent- 
age of  profit.  In  cases  where  the  auxiliary  industries 
enjoy  a  normal  profit  it  could  look  after  the  amortiza- 
tion, or  along  with  defraying  the  expense  of  amortiza- 
tion could  still  contribute  a  supplement  to  a  small 
manufacturing  profit. 

There  arise  here  a  large  number  of  combinations 
the  explanation  and  discussion  of  which  would  lure 
us  too  far.  Since  those  industries  which  reap  the 
greatest  advantage  through  its  existence,  would  have 
to  contribute  in  largest  measure  to  the  guarantee 
fund,  no  industry  will  be  injured  at  the  cost  of  others. 
There  will  be  introduced  a  constant  cycle,  which 


74      The  Future  of  German  Industrial  Exports 

will  complete  itself  with  harm  to  none  but  with 
profit  for  all.  For  this  reason  it  is  not  to  be  ex- 
pected that  opposition  will  arise  against  such  a 
means  of  safeguarding  the  export  trade,  unless  it  be 
through  selfish  interests,  which,  for  the  common 
good,  would  at  once  be  shown  the  error  of  their  ways 
by  the  power  of  the  state,  if  need  be. 

The  State,  moreover,  will  take  care  that  all  advances 
of  science  and  practice  be  made  accessible  to  such 
auxiliary  industries  without  cost.  The  guarantee 
fund  would  again  have  to  take  care  of  these  costs. 
It  is  apparent,  therefore,  that  the  State  is  not  called 
upon  to  sacrifice  its  resources.  Its  task  is  only  to 
exercise  its  right  of  special  sovereignty  so  as  to  regu- 
late quotas  of  contribution  in  a  way  satisfactory  to 
all  industries,  and  to  systematize  the  collection  of  the 
quotas  so  that  the  fund  proceeds  automatically,  with- 
out constraint  or  friction. 

The  price-superiority  of  industries  having  protective 
value  will  he  brought  about  through  the  establishment 
of  auxiliary  industries  whose  continued  operation  and 
profitableness  is  assured  through  the  State  by  means  of 
a  general  guarantee  fund.  All  industries  will  be 
called  upon  to  support  this  fund^  because  its  benefits 
to  export  activity  reach  every  form  of  industry, 

CRUSHING     **  unthinkable"     LABOUR    DISPUTES 

All  financial  support  is  useless  if  production  is 
interrupted  by  causes  lying  in  labour  conditions. 
Here  there  now  arises  a  delicate  question  the  solution 
of  which   could   scarcely   give   satisfaction   to   one 


The  Golden  Guarantee  and  Discipline  of  Labour    75 

party.  It  must  nevertheless  be  given  consideration 
for  it  is  essential.  Strikes  and  lock-outs  impairing 
the  work  of  industries  which  have  one  of  the  above- 
mentioned  protective  values  or  all  of  them  in  general, 
or  impairing  the  work  of  their  auxiliary  industries, 
must  under  all  circumstances  be  avoided.  Such 
cases  are  unthinkable  in  times  of  war  with  industries 
which  are  concerned  in  military  supply,  because  the 
State  possesses  sufficient  means  to  prevent  them — 
means  which  are  used  impartially  against  employer 
and  employee  and  which  experience  teaches  are 
successful.  Everything  has  been  settled  peacefully. 
A  command  was  sufficient.  There  is  no  reason, 
therefore,  why  the  State  in  any  given  case  even  in 
times  of  peace  could  not  straighten  out  affairs  with- 
out the  tedious  negotiations  of  contesting  parties 
which  always  leave  bitter  feelings  in  the  hearts  of 
both.  The  export  trade,  because  it  is  a  measuring 
of  strength,  domestic  and  foreign,  is  a  battle  even  if 
within  the  realm  of  peace.  To  wage  it  successfully, 
the  combatant  must  remain  free  from  irritation  and 
dissension  within.  It  is  to  the  interest  of  foreign 
countries  hostile  to  our  export  trade  to  encourage 
labour  confficts  and  in  concrete  cases  they  will  not 
spare  the  *' silver  bullets."  Long  investigations 
about  causes  would  injure  industrial  development 
and  therewith  the  export  trade.  As  in  times  of  war, 
so  here,  the  procedure  must  be  cut  short — by  the 
mandate  of  the  State. 

State  action  will  prevent  further  trouble  before- 
hand by  placing  the  relationship  between  employer 


76      The  Future  of  German  Industrial  Exports 

and  employee  on  a  clear  basis  which  will  satisfy  the 
claims  of  both,  as  far  as  possible.  For  the  industries 
in  question,  certain  wage  standards  are  to  be  estab- 
lished which  serve  as  guarantees  that  friction  will 
be  avoided.  The  war  has  confirmed  the  truth  of  the 
Kaiser's  word  concerning  the  elimination  of  party 
antagonisms.  All  parties  have  indeed  perceived 
the  advantages  which  arise  when  party  interests 
give  place  to  the  interest  of  the  country.  The  pros- 
perity of  the  export  trade  is  in  the  common  interest 
of  all,  the  employer  as  well  as  the  employee,  antagon- 
isms which  could  damage  it  must  therefore  be  elimin- 
ated and  remain  so.  They  will  in  general  be  only 
of  a  financial  nature.  A  just  proportioning  of  the 
profits  which  come  to  the  employer  and  to  the 
employee  through  the  security  of  the  export  trade 
can  unquestionably  be  reached  if  good  will  and  recog- 
nition of  the  ultimate  purpose  are  shared  by  both 
sides.  Where  this  is  not  the  case  there  arise  selfish 
interests,  which  should  be  suppressed  by  force  on 
behalf  of  the  general  welfare.  In  given  cases  the 
general  guarantee  fund  can  again  be  appealed  to  in 
smoothing  out  financial  inequalities. 

In  all  industries  having  protective  value  as  well  as 
in  their  auxiliary  industries^  labour  disturbances  which 
arise  through  antagonisms  between  employer  and  em^ 
ployee  must  be  suppressed  by  every  means. 

STOPPING    LEAKS   TO   THE    BLACKLIST 

In  another  place  we  have  pointed  out  that  in  case 
our  products  have  to  be  placed  under  a  partial  or 


The  Golden  Guarantee  and  Discipline  of  Labour    77 

complete  embargo,  its  effectiveness  must  not  be 
destroyed  by  the  consumers  receiving  a  supply  in- 
directly. This  can  be  prevented  only  if  the  buyers 
are  known.  Therefore  there  is  a  special  necessity 
of  keeping  a  general  register  of  the  purchasers  of 
important  raw  materials  and  pre-manufactures. 
Of  course  this  must  be  done  in  such  a  way  as  not  to 
endanger  business  secrets.  This  very  difficulty 
makes  the  problem  a  hard  one  to  solv^*  We  must 
nevertheless  attempt  it. 

A  useful  expedient,  perhaps  worth  considering,  is  a 
Central  Sales-Bureau  for  goods  having  protective 
value  to  the  export  trade.  The  danger  that  domestic 
buyers  will  circumvent  the  Sales-Bureau  and  supply 
the  outside  world  in  spite  of  it  will  be  entirely  elimin- 
ated by  a  regulation  to  the  effect  that,  only  on 
authorization  by  the  Central  Sales-Bureau,  may 
officials  of  roads  crossing  our  boundaries  permit  goods 
to  be  shipped  out.  The  advantage  of  a  Central 
Sales-Bureau  for  foreign  countries  scarcely  needs 
further  discussion.  The  danger  of  uneconomic 
price  regulation  is  out  of  the  question  since  the  state 
will  watch  over  that  in  the  interest  of  export  protec- 
tion. Sufficient  assurance  that  the  Central  Sales- 
Bureau  will  not  exercise  influence  upon  purely  domes- 
tic trade  is  contained  in  the  stipulation  that  it  will 
operate  only  for  foreign  countries  and  confine  its 
jurisdiction  to  exports.  It  is  further  presumed 
that  shipments  through  the  Central  Sales-Bureau 
can  be  made  only  by  manufacturers  and  never  by 
middlemen.     To  the  proper  governmental  authori- 


78      The  Future  of  German  Industrial  Exports 

ties  belongs  the  control  of  the  Central  Sales-Bureau 
in  reference  to  its  foreign  customers,  prices,  and  the 
right  to  lay  partial  or  complete  embargoes.  This 
control  is  most  easily  to  be  carried  out  by  granting 
the  officials  a  seat  and  voice  in  the  supreme  directing 
body.  To  simplify  affairs  a  certain  number  of 
places  in  the  directorate  of  the  Central  Sales-Bureau 
and  of  the  general  guarantee  fund  will  be  filled  by 
the  same  individuals,  who  are  to  be  elected  inde- 
pendently of  each  other  by  industry  and  the  state 
authorities. 

The  Central  Sales-Bureau  is  to  be  thought  of  as 
organized  in  a  similar  fashion  to  the  general  guarantee 
fund.  The  separate  industries  of  protective  value 
form  branch  sales-bureaus,  which  represent  subor- 
dinate units  of  the  Central  Sales-Bureau.  The 
directors  of  these  units  as  of  those  in  the  general 
guarantee  fund  must  be  in  close  contact,  especially 
in  regard  to  the  above-mentioned  indemnity  quotas 
which  are  temporarily  placed  upon  the  protected 
industries.  The  Central  Sales-Bureau  is  the  execu- 
tive organ  for  the  practical  carrying  out  of  embargoes 
and  boycotts.  The  cooperation  of  the  general 
guarantee  fund  is  necessary  to  maintain  embargoes 
and  boycotts  without  economic  injury  to  the  domes- 
tic industries  involved.  Its  directors  would  adminis- 
ter the  financial  power. 

The  Central  Sales-Bureau  can  of  course  be  re- 
placed by  a  purely  administrative  office  to  which 
must  be  reported  all  arrangements  with  foreign 
countries  concerning  products  of  protective  value. 


The  Golden  Guarantee  and  Discipline  of  Labour    79 

This  administrative  office  is  the  court  of  last  appeal 
for  export  permission  from  the  instant  when  em- 
bargo measures  are  applied.  Which  of  the  two  forms 
of  control  is  preferable  will  appear  from  the  detailed 
studies  of  the  government  authorities  and  the  in- 
dustrial unions.  Both  bodies  furnish  the  data  for 
the  export-control  statistics  and  work  out  the  rules 
and  regulations  for  exports. 

Industries  having  protective  value  are  to  make  known 
their  foreign  customers  to  a  bureau  of  control.  This 
bureau  works  hand  in  hand  with  the  directors  of  the 
general  guarantee  fund.  The  directors  of  both  bodies 
are  elected  independently  of  each  other  by  industry  and 
by  the  State. 


OBSESSED  by  the  fear  that  their 
invaluable  monopolies,  the 
*' shock  troops"  of  their  in- 
tended commercial  conquests,  will  be 
imitated  or  transplanted  to  America 
or  France  or  England,  the  Germans 
decree  that  no  alien  capital  shall 
have  any  interest  in  any  of  them. 
To  keep  them  at  maximum  efficiency 
they  propose  to  replace  all  machin- 
ery to  keep  pace  with  even  the 
minutest  improvement;  to  compel 
every  scientist  and  inventor  in  the 
Empire  to  reveal  his  discoveries 
instantly  to  the  monopolies,  and  to 
guard  all  their  plants  and  processes 
with  a  cordon  of  bayonets.  They  are 
going  to  bolster  these  monstrosities 
of  commerce  with  what  they  plainly 
call  *  'special  privileges' ' — reba  tes, 
tax  remissions,  premiums,  long 
working  hours,  priority  orders ,  And 
every  employee,  from  president  to 
water-boy,  is  to  be  enlisted  for  life 
— the  better  to  create  an  '^hereditary 
personnel''  and  maintain  the  pall  of 
secrecy. 


CHAPTER   SIX 

THE  CHINESE  WALL  OF  SECRECY 

Hounding  Allied  Money  Out  of  Germany! — ** Capital  Does  Not 
Exist  Independently  of  the  State" — Prods  to  Speed  Up  "Pro- 
gress"— Compulsory  Reports  of  Discoveries — ^The  Veil  of  Mys- 
tery to  Enshroud  German  Inventions — "Special  Privileges" 
for  "Protective"  Industries — Drafting  Labour  for  Life — Strict 
Exclusion  of  Foreigners  from  Teuton  Enterprises — ^The  Ban  on 
Entente  Capital. 

THE  control  of  the  State  over  those  industries 
which,  thanks  to  their  protective  value,  serve 
as  protection  to  the  export  trade,  must 
reach  out  also  in  the  direction  of  capital;  first,  in 
order  to  strengthen  and  stiffen  their  financial  back- 
bone, and  then  in  order  to  hinder  foreign  capital 
from  gaining  an  influence  over  the  conduct  and 
control  of  these  industries.  The  first  purpose  is  to 
be  accomplished  by  a  subdivision  under  the  admin- 
istration of  the  general  guarantee  fund;  the  second, 
by  the  proper  government  officials  (commercial 
registrars).  Industries  with  protective  value  must 
never  under  any  circumstances  be  at  a  loss  for  capital; 
their  securities  must  be  permanently  beyond  the 
range  of  wild  speculation.  Their  demands  for 
capital  must  find  satisfaction  in  the  general  guarantee 
fund,  or  as  the  case  may  be,  through  its  mediation 

82 


The  Chinese  Wall  of  Secrecy  83 

with  related  industrial  unions.  In  the  case  of  in- 
dustries especially  valuable  for  protecting  the  export 
trade  every  influence  of  foreign  capital  must  be 
eliminated.  A  seat  and  a  voice  in  the  directorates 
of  such  industries  must  be  entirely  out  of  the  reach 
of  foreigners. 

Ways  and  means  must  be  found  to  hinder  the 
appointment  of  dummies  in  directorates,  who  are 
expected  to  prevent  the  formation  of  a  majority 
at  the  important  meetings,  so  as  to  defeat  measures 
against  foreign  countries  hostile  to  our  exports.  If 
the  usual  expedients  here  are  of  no  avail,  the  State 
must  have  the  right  to  annul  directorate  resolutions 
which  could  impair  the  protection  of  the  export 
trade.  That,  to  be  sure,  is  an  infringement  of 
guaranteed  commercial  liberties,  yet  it  is  necessary 
when  the  State  meets  opposition  in  exercising  its 
duty  to  protect  exports.  Capital  also  must  learn 
that  it  does  not  exist  and  may  not  be  active  primarily 
for  itself,  but  that  the  common  welfare  comes  before 
its  special  interests,  even  forgetting  for  the  moment 
that  the  latter  thrive  most  when  capital  is  serving 
the  common  good. 

The  administration  and  conduct  of  industries  with 
protective  value  must  remain  free  from  the  influence 
of  foreign  capital, 

PRODS  TO  SPEED  UP  "PROGRESS" 

There  are  a  number  of  industries  with  especially 
high  protective  value  whose  progressive  development, 
which  is  absolutely  essential  to  the  continued  main- 


84      The  Future  of  German  Industrial  Exports 

tenance  of  their  protective  value,  is  dependent  upon 
their  working  equipment.  This  is  especially  true 
in  mining  industries.  It  is  in  the  interest  of  profit 
to  put  up  as  long  as  possible  with  the  equipment  on 
hand  (or,  speaking  in  accounting  terms,  until  it  can 
be  written  off  the  books  without  any  debt  remaining). 
Such  a  practice  is  often  incompatible  with  the  attain- 
ment of  the  desired  maximum  efficiency,  measuring 
this  by  the  latest  improvements  in  science  and 
practical  work.  An  industry  of  protective  value 
must  stand  in  the  forefront  in  every  respect,  if  the 
protective  value  expected  of  it  is  to  be  permanently 
at  our  disposal  in  its  fullest  extent. 

It  must  not  be  overlooked  that  success  from  the 
standpoint  of  profits  is  always  assured  to  these 
industries  (guarantee  fund),  if  not  on  their  account, 
at  least  in  the  interest  of  export  protection.  The 
general  welfare  demands  that  these  industries  be 
kept  on  a  sound  basis,  with  natural  and  satisfactory 
profits.  Their  rare  and  valuable  advantages  im- 
pose duties,  among  which  is  primarily  that  of  con- 
tinually perfecting  operating  equipment,  working 
methods  in  use,  and  finally  the  organization  of  the 
business. 

COMPULSORY   REPORTS    OF   DISCOVERIES 

All  industries  in  a  technical  way  are  already 
subject  to  state  control  in  respect  to  their  safety 
provisions.  We  ought  to  welcome  rather  than  con- 
demn the  addition  of  state  control  of  manufacturing 
processes.     Industry  would   reap   only   advantages 


The  Chinese  Wall  of  Secrecy  85 

/rem  this,  because  it  would  automatically  be  advised 
of  all  means  for  perfecting  and  increasing  its  effi- 
ciency. In  future,  at  least,  we  will  certainly  strive 
for  this  goal.  Those  who  find  themselves  momen- 
tarily advanced  in  a  technical  way  will  combat  it 
and  because  of  their  financial  means  will  always 
be  in  a  position  to  make  new  advances.  They  will 
see  in  the  general  endeavour  for  this  result  an  injury 
to  their  competitive  superiority. 

Closer  examination,  however,  shows  that  this 
fear  is  unfounded.  If  technical  improvements 
quickly  become  common  property,  progressive  con- 
cerns will  be  forced  to  add  new  improvements 
to  the  old  in  order  to  remain  superior.  Since  the 
exchange  of  inventions  is  mutual,  they  will  likewise 
gain  advantage  from  those  of  others.  An  unin- 
terrupted contest  is  instituted  in  which  (to  the 
general  advantage)  there  will  always  be  a  new  leader 
at  the  top.  Progress  which  formerly  took  place 
spasmodically  will  become  constant.  Improve- 
ments which  give  the  owner  superiority  mislead  him 
into  resting  on  his  oars  in  stagnant  waters  until 
others  catch  up.  This  rest  acts  like  a  brake  upon 
the  general  progress  which  is  necessary  for  the  main- 
tenance and  increase  of  the  export  trade.  A  control 
of  manufacturing  processes  would  be  the  best  imag- 
inable encouragement  for  progress  and  the  simplest 
medium  of  exchange  for  all  individual  improve- 
ments. To  make  such  a  control  general  will  probably 
take  many  years,  but  its  foundations  can  even  now 
be  laid  through  its  introduction  into  those  industries 


86     The  Future  of  German  Industrial  Exports 

which  have  especially  high  protective  value.  The 
experiences  gained  in  this  way  will  make  its  genera! 
application  easier  and  will  contribute  toward  banish- 
ing individual  mistrust. 

Whether  this  control  of  manufacturing  processes 
is  to  be  exercised  directly  through  the  State  or 
through  the  medium  of  the  associations  of  the  various 
trades  is  a  question  of  secondary  nature.  Here  also 
the  uniting  of  industrial  and  state  representatives  will 
probably  present  the  best  solution. 

Industries  with  high  protective  value  for  the  export 
trade  are  to  he  subjected  to  a  control  of  manufacturing 
processes  in  order  to  assure  an  uninterrupted  perfecting 
of  their  technical  efficiency. 

The  body  controlling  manufacturing  processes 
must  have  a  system  which  keeps  it  informed  con- 
cerning all  improvements  of  a  technical  nature. 
It  then  has  the  duty  of  determining  where  and  to 
what  extent  the  practical  application  of  these  im- 
provements can  take  place.  The  sources  at  its  dis- 
posal are  of  a  state  and  private  nature.  Frequent 
reports  will  be  made  to  the  controlling  body  con- 
cerning the  scientific  and  experimental  activity  of 
state  testing  institutions,  laboratories,  and  technical 
schools.  This  body  will  naturally  also  be  in  close 
association  with  the  patent  authorities. 

The  duty  of  making  reports  will  now  fall  to  private 
experimental  institutions  and  laboratories  to  which 
will  be  given  scientific  and  practical  support  in  re- 
turn. From  the  mutual  exchange  of  thought  and 
experience  there  arises  a  cooperation  of  all  forces 


The  Chinese  Wall  of  Secrecy  87 

subserving  progress.  It  will  be  found  necessary 
to  lay  down  certain  rules  for  commercializing  new 
inventions  in  order  to  protect  the  maker  from  loss 
when  the  inventions  are  made  accessible  to  broader 
circles.  We  dare  not  diminish  his  right  to  a  share 
in  the  earnings.  The  more  secure  his  rights  and 
interests  from  the  very  start,  the  less  becomes  his 
opposition  to  a  general  application  of  his  invention. 
For  in  this  way  experimental  and  inventive  activity 
becomes,  from  the  first,  independent  of  individual 
capitalists  and  of  capital  in  general.  This  duty 
to  surrender  inventions  can  extend  for  the  present 
only  to  those  the  application  of  which  strengthens 
industries  having  high  protective  value. 

Inventions  and  other  technical  progress  which  can 
bring  about  an  improvement  in  industries  having  pro- 
tective  value  are  subject  to  the  duty  of  being  reported 
to  the  body  exercising  control  of  manufacturing  pro- 
cesses. This  body  will  transmit  them  to  the  industries 
mentioned. 

To  simplify  the  matter  of  compensating  the  in- 
ventors and  authors  of  new  improvements,  recourse 
to  the  controlling  body  of  the  general  guarantee  fund 
again  recommends  itself.  This  body  will  charge  a 
special  sub-department  with  the  estimation  of  the 
royalties,  with  the  elaboration  and  completion  of 
utilization  agreements  (between  the  inventor  and 
the  industry  using  the  invention),  and  with  the  col- 
lection of  royalties  (licenses)  and  the  payment  of 
these  to  the  inventor,  etc. 

The  financial  activity  resulting  from  the  compulsory 


88      The  Future  of  German  Industrial  Exports 

handing  over  of  inventions  and  improvements  is  mxide 
the  duty  of  the  general  guarantee  fund. 

THE    VEIL   OF   MYSTERY 

If  all  inventions  and  improvements  are  made 
accessible  to  a  central  ofiice,  a  suitable  organization 
will  make  it  possible  to  keep  these  inventions  and 
improvements  out  of  the  reach  of  foreign  countries 
hostile  to  our  exports,  so  far  as  it  appears  necessary 
for  the  protection  of  the  export  trade.  The  ways  and 
means  necessary  for  this  purpose  are  to  be  invented 
and  worked  out  by  the  body  exercising  control  ot 
manufacturing  processes,  and  are  to  be  formulated 
by  it  in  clearly  and  sharply  defined  regulations. 
These  will  not  involve  work  materials  alone,  but  also 
the  persons  engaged  upon  them. 

The  idea  ought  not  exactly  to  get  about  that  a 
Chinese  wall  is  being  thrown  around  German  in- 
ventions and  improvements,  although  the  experiences 
of  the  war  have  taught  us  that  too  great  scientific 
familiarity  with  foreign  countries  was  rewarded  by 
ingratitude  and  injury.  It  is,  however,  necessary 
to  preserve  certain  inventions  and  improvements 
exclusively  for  our  own  industries  as  long  as  need  be, 
in  order  to  maintain  their  protective  value  undimin- 
ished for  the  sake  of  strengthening  the  export  trade. 
Things  like  this  seem  difficult  and  complicated 
at  first  glance,  but  where  there  is  a  will  there  is  a 
way.  The  will  in  this  case  is  the  command  of  self- 
preservation  and  for  that  reason  is  assured. 

Inventions  and  improvements  which  are  necessary 


The  Chinese  Wall  of  Secrecy  89 

for  strengthening  industries  having  a  protective  value 
must  he  withheld  from  foreign  countries  hostile  to  our 
exports. 

Here,  accordingly,  arises  a  further  obligation  to 
compensate  experimenters  and  inventors.  This  obli- 
gation is  to  be  met  by  the  general  guarantee  fund 
which  at  the  same  time  will  make  a  charge  upon 
(debit  to)  the  industries  making  use  of  these  in  en- 
tions  and  improvements. 

"special  privileges''  for  ''protective*' 
industries 

In  a  purely  material  connection,  industries  having 
protective  value  must  be  granted  special  privileges 
so  that  they  may  be  provided  with  raw  materials 
and  indispensable  working  equipment  in  advance  of 
all  other  industries,  for  the  sake  of  preventing  any 
interruption  in  their  activity.  For  instance,  when 
raw  materials  are  scarce,  the]  industry  'having 
protective  value  has  the  preference.  Again,  in  case 
of  an  interruption  in  the  power  current,  safety  pre- 
cautions are  to  be  taken  beforehand  at  the  general 
power  plant  to  prevent  an  industry  with  protective 
value  from  being  shut  down.  In  securing  coal,  oil, 
benzine,  ores,  metals,  etc.,  industries  having  pro- 
tective value  enjoy  the  preference,  the  same  as  state 
enterprises.  As  has  already  been  explained  prices 
are  regulated  by  the  general  guarantee  fund  in  case 
of  advances  in  the  market. 

Among  the  prerogatives  to  be  granted  to  industries 
with  a  protective  value  are  also:  freight  concessions, 


90     The  Future  of  German  Industrial  Exports 

which  can  be  not  only  of  a  financial  nature  but  also 
such  as  to  expedite  industrial  processes;  the  granting 
of  longer  working  hours  in  cases  where  they  are  tem- 
porarily necessary;  brief  tax  remissions,  and,  if 
need  be,  tax  exemptions;  and  expropriation  rights 
when  expansion  or  enlargement  over  new  land  is 
necessary. 

Industries  with  protective  value  are  to  he  given 
special  privileges  in  ordering  raw  materials  and  other 
manufacturing  necessities^  and  in  reference  to  freight 
and  transportation  concessions^  working  hours,  tax 
and  expropriation  rights, 

DRAFTING    LABOUR   FOR    LIFE 

All  persons  who  are  employed  in  industries  of  pro- 
tective value  must  be  entered  in  special  lists  by  the 
body  controlling  manufacturing  processes,  so  as  to* 
safeguard  these  industries.  From  the  general  lists  a 
special  list  is  to  be  drawn  up  which  contains  the 
names  of  employees  in  protective  industries,  who 
work  with  manufacturing  methods  or  procedures 
over  which  foreign  countries  hostile  to  our  exports 
have  no  control.  On  the  part  of  the  State,  care 
must  be  taken  that  special  material  advantages 
(premiums,  profit-sharing,  pensions),  both  now  and 
for  the  future,  be  granted  to  these  individuals  by 
the  employer  in  order  to  hold  them  fast  to  the  in- 
dustry in  question.  These  persons — ^whether  they 
be  directors,  operating  or  scientific  officers,  or  la- 
bourers— must  be  subject  to  a  state  organization 
similar  to  that  of  the  army. 


The  Chinese  Wall  of  Secrecy  9 1 

Without  permission  of  this  organization  no  emi- 
gration of  persons  in  these  Hsts  can  take  place. 
They  are  subject  to  especially  strict  rules  for  safe- 
guarding manufacturing  secrets  and  methods.  For- 
eigners can  not  be  permitted  to  find  employment  in 
concerns  of  this  sort.  A  certain  limitation  of  per- 
sonal freedom,  it  must  be  confessed,  is  here  involved, 
yet  an  objection  against  this  can  scarcely  be  raised 
for  there  are  considerable  material  advantages  in 
return.  No  one,  moreover,  is  compelled  to  take 
employment  in  these  special  industries.  Whoever 
places  himself  at  their  disposal  knows  what  rights 
and  duties  await  him  and  must  recognize  that  his 
continuation  there  is  necessary  in  the  interest  of 
the  country.  There  will  always  be  deserters.  They 
must  expect  severe  punishment  meted  out  according 
to  the  amount  of  responsibility  attached  to  the  post 
which  they  left.  On  the  other  hand,  freedom  of 
personal  movement  within  the  same  or  a  closely 
related  industry  is  to  suffer  no  limitation. 

The  employees  in  protective  industries  must  be 
prevented  from  transferring  these  industries  or  parts 
of  them  to  foreign  countries.  In  these  industries  only 
German  subjects  can  be  allowed  to  find  employment. 

STRICT    EXCLUSION     OF    FOREIGNERS     FROM     TEUTON 
ENTERPRISES 

The  exclusive  maintenance  of  such  industries  for 
the  Empire  demands  a  further  control  which  ex- 
tends to  changes  in  ownership.  Since  these  indus- 
tries share  the  protection  of  the  State  in  an  especially 


92        The  Future  of  German  Industrial  Exports 

high  degree,  the  State  must  be  given  the  right  of 
consultation  in  case  they  pass  into  new  hands. 
With  an  individual  owner  the  state  control  will  limit 
itself  to  ascertaining  whether  the  future  owner 
exhibits  those  peculiarities  which  in  a  material, 
technical,  and  moral  connection  offer  a  guarantee 
that  the  industry  in  question  will  remain  at  its  former 
jbeight  and  capacity  for  development,  and  banish  all 
possibility  of  its  being  transplanted  to  foreign 
countries  by  the  new  owner.  In  the  case  of  indus- 
tries with  the  form  of  companies,  the  State  will 
exercise  its  rights  already  mentioned  above,  in  refer- 
ence to  the  appointment  of  executors  and  directors. 
The  exclusion  of  foreigners  is  important  in  all  cases. 

Change  of  ownership  in  protective  industries  and 
also  the  appointment  of  their  higher  officers  are  subject 
to  the  approval  of  the  State. 

No  objection  will  generally  be  made  to  industries 
of  protective  value  having  an  interest  in  similar  or 
related  industries  within  Germany  (first  process,  or 
improving  industries),  as  long  as  the  participation 
does  not  bring  about  financial  weakness  or  an 
undesirable  dispersion  of  energy  endangering  their 
protective  value.  Participation  in  similar  foreign 
industries  will  only  be  admissible  where  there  is  no 
doubt  about  the  security  of  raw  materials  or  pre- 
manufactures,  and  where  financial  participation 
brings  with  it  no  weakening  of  the  main  firm  or 
tendency  toward  a  transplanting  of  the  industry. 
Such  participation,  besides  being  entirely  subject  to 
approval  by  the  State  in  all  cases  of  protective  in- 


The  Chinese  Wall  of  Secrecy  93 

dustries,  must  also  take  place  in  such  a  form  that 
an  undiminishable  right  to  a  decisive  voice  in  the 
deliberations  of  the  foreign  firm  is  gained  by  the 
industry  owning  the  interest. 

In  the  establishment  of  foreign  branches  (the 
appointment  of  representatives)  by  protective  in- 
dustries, special  care  should  be  taken  in  all  cases 
that  foreign  officials  can  not  possibly  get  an  insight 
into  the  manufacturing  process.  The  personnel  of 
these  officials  must  be  known  to  our  state  control. 

The  participation  of  protective  industries  in  foreign 
industries  is  subject  to  the  approval  of  the  State^  which 
is  granted  under  certain  pertinent  regulations.  Such 
participation  can  not  he  permitted  when  it  involves 
the  possibility  of  a  protective  industry  being  trans- 
planted, 

THE    BAN    ON    ENTENTE    CAPITAL 

The  participation  of  foreign  capital  in  protective 
industries  must  be  absolutely  debarred.  This  ex- 
clusion can  be  accomplished  by  registering  the  name 
of  the  owner  on  stock  when  it  is  issued,  and  by 
the  stipulation  that  dividends  will  be  paid  only  to 
citizens  of  the  Empire,  who  must  prove  themselves 
the  owners.  With  an  individual  proprietor  this 
exclusion  involves  merely  the  rule  that  he  must  be 
a  citizen  of  the  Empire.  The  substitution  of  dum- 
mies can  never  of  course  be  prevented,  yet  the 
injurious  influence  arising  from  it  will  be  entirely 
avoided  by  the  measures  of  control  mentioned  earlier. 
The  oversight  and  control  of  capital  in  its  efforts 


94      The  Future  oj  German  Industrial  Exports 

to  buy  an  interest  in  our  industries  must  be  con- 
ducted with  special  strictness,  because  herein  lies 
the  breach  through  which  foreign  countries  hostile  to 
our  exportation  can  most  easily  attack  our  protective 
industry.  Foreign  countries  will  try  to  buy  such 
an  interest  not  only  in  order  to  make  our  industries 
of  protective  value  subservient  to  them  and  to  pre- 
pare their  transplanting,  but  also  because  the  pro- 
tective industries,  thanks  to  their  exceptional  posi- 
tion, will  in  all  probability  return  sure  and  satisfac- 
tory profits. 

Foreign  capital  is  to  be  excluded  from  protective 
industries:  It  can  not  he  permitted  to  acquire  any 
sort  of  influence  over  them. 


To  MAINTAIN  exclusive  and 
overwhelming  advantages  for 
German  commerce  through- 
out the  world,  the  German  Diplo- 
matic corps  will  operate  as  an 
Advance  Guard  of  the  Commercial 
Invasion,  working  in  secret  unison 
with  every  agency — to-wit,  every 
German  —  in  Allied  lands.  The 
^'Defence  Statistics,^'  trade  condi- 
tions, business  methods  and  mar- 
kets, and  all  actions  hostile  toKultur 
will  thus  instantly  be  marshalled 
and  reported.  And  the  Kaiser  pre- 
sumes that  by  dint  of  offering  to 
trade  rebate  for  rebate,  subsidy  for 
subsidy,  and  private  advantage  for 
German  toleration,  some  nations 
can  be  translated  into  the  Prussian 
influence  and  will  open  their  doors 
with  privy  welcome  to  German  goods. 
Temptation,  in  the  shape  of  secret 
concessions,  and  incentive,  in  the 
shape  of  murderous  threats,  are  to 
be  skilfully  manipulated  by  the  Am- 
bassadors from  Berlin,  constituting 
the  weapons  with  which  the  Allies 
in  succession  are  to  be  dragged  into 
the  spider's  web. 


CHAPTER  SEVEN 

DIPLOMACY,  THE  ADVANCE  GUARD  OF 
THE  EXPORT  WAR 

Private  Advantage  and  Hidden  Rebates  the  Basis  of  German 
Business — Obtaining  Secret  Privileges  Abroad — Confidential 
Exchange  of  "  Compensations" — A  Tempting  Bargain  in  Rebates 
and  Premiums — ^The  Prize  Bait  of  the  Prussian  Ambassador. 

4.  Economic  Compensations 

WE  SHOULD  make  a  distinction  between 
economic  compensations  as  to  whether 
they  are  domestic  or  foreign.  Both  have 
the  purpose  of  assuring  advantage  to  our  own  coun- 
try, the  latter  through  a  direct  effect  upon  the  do- 
mestic industry,  the  former  in  the  same  way  or  in- 
directly through  the  granting  of  such  concessions  to 
foreign  countries  as  will  benefit  our  domestic  industry 
and  therewith  our  export  trade. 

Economic  advantages  of  a  domestic  nature  have 
been  treated  for  the  most  part  in  the  preceding  para- 
graphs. The  compensations  granted  within  our 
country,  as  appears  from  earlier  explanations,  repre- 
sent a  mutual  exchange  of  strength  accomplished 
under  the  direction  of  the  State  between  the  indus- 
tries with  protective  value  and  the  industries  to  be 
protected,  with  the  single  purpose  of  throttling  every 

96 


Diplomacy  the  Advance  Guard  97 

attempt  to  weaken  the  export  trade.  The  compensa- 
tions consist  of  easily  payable  indemnities  for  the 
protective  industry  which  embargoes  its  exports  in 
order  to  secure  justice  for  others,  and  in  moral  and 
material  preferments  which  are  given  to  industries 
having  a  protective  value. 

OBTAINING  SECRET  PRIVILEGES  ABROAD 

In  return  for  the  protective  services  which  must 
at  times  be  demanded  of  certain  industries  and  per- 
formed by  them  in  the  interest  of  the  German  export 
trade,  these  industries  must  also  be  assured  special 
privileges  and  compensations  by  commercio-political 
means  in  foreign  countries.  The  trade  bureaus  of 
the  diplomatic  representatives  will  have  the  duty 
of  granting  these  industries  not  only  especial  atten- 
tion but  also  special  support  in  council  and  action. 
This  support  will  have  to  go  so  far  that  it  represents 
to  a  certain  degree  the  very  foundation  for  the  activity 
of  these  industries  in  foreign  countries.  By  this 
it  is  not  meant  that  the  other  industries  are  not  Hke- 
wise  to  share  the  careful  support  of  the  foreign  repre- 
sentatives of  the  State,  but  they  will  have  to  come 
after  the  industries  having  a  protective  value,  for 
the  strengthening  of  the  latter  by  diplomatic  support 
represents  and  immediately  induces  after  it  the 
strengthening  of  all  other  industries  shipping  to  this 
foreign  country. 

Industries  with  protective  value  have  claims  upon 
special  support  and  advancement  through  the  diplo- 
matic missions. 


98      The  Future  of  German  Industrial  Exports 

These  claims  make  it  necessary  for  diplomatic 
missions  engaged  in  foreign  countries  to  have  not 
only  representatives  who  look  after  the  interests  of 
commerce  from  a  political  point  of  view,  but  also 
those  who  study  commerce  from  the  standpoint  of 
industry.  The  latter,  whenever  possible,  must  be 
chosen  right  from  the  ranks  of  industrial  life.  The 
thought  readily  suggests  itself  that  these  representa- 
tives should  work  hand  in  hand  with  the  domestic 
protective  organizations  which  were  mentioned  in 
earlier  explanations  and  that  the  latter  organizations 
should  represent  the  source  from  which  the  permanent 
assistants  of  our  missions  abroad  are  drawn.  It  must 
not  be  overlooked  that  in  imposing  temporary  em- 
bargoes on  our  exports  when  the  need  arises,  the 
deciding  factor  will  be  the  reports  from  our  foreign 
missions.  These  reports  must  not  only  be  thoroughly 
practical  but  also  expert.  This  second  condition 
presupposes  an  expert  stafFsuch  as  is  scarcely  imagin- 
able without  practical  training  and  industrial  ex- 
perience for  years  in  advance.  The  experiences 
which  have  been  gained  recently  in  high  offices  of 
state  with  men  who  came  from  the  outside  world 
of  affairs  give  a  satisfying  assurance  that  officials 
of  our  foreign  missions  who  come  from  industrial 
circles  will  perform  good  service  for  the  export 
trade. 

For  the  protection  of  industrial  exports  there  are  to 
he  placed  at  the  disposal  of  our  diplomatic  missions  in 
foreign  countries  representatives  who  have  had  unusual 
experience  in  many  years  of  industrial  activity. 


Diplomacy  the  Advance  Guard  .  99 

CONFIDENTIAL  EXCHANGE  OF  *' COMPENSATIONS" 

By  placing  officials  in  our  foreign  missions  better 
and  faster  work  will  be  done  on  statistics,  so  that 
we  can  have  an  exact  idea  of  the  condition  of  the 
export  trade  at  all  times.  Every  upward  and  down- 
ward movement  of  exportation  in  general  or  of  any 
individual  export  will  immediately  be  recognizable 
in  its  full  extent  and  will  be  subject  to  regulation 
by  the  proper  measures. 

Besides  the  above-mentioned  compensations  in 
which  industries  with  protective  value  can  share 
there  is  still  a  larger  number,  the  necessity  for  which 
is  conditioned  by  current  circumstances.  It  is  for 
instance  imaginable  that  a  foreign  country  may 
promote  by  import  measures  German  industries 
not  essential  to  it  if  other  German  industrial  products 
which  this  country  finds  necessary  are  introduced  as 
cheaply  as  possible.  The  degree  of  cheapness  coming 
into  question  here  can  become  so  low  under  certain 
circumstances  that  the  industry  in  question  endangers 
its  profitableness  if  it  wishes  to  meet  the  demand. 
Since,  however,  the  fulfilment  of  this  demand  is  in 
the  interest  of  other  export  products  a  financial 
equalization  must  be  made.  It  can  be  brought  about 
either  by  recourse  to  the  general  guarantee  fund  or 
by  granting  export  premiums  through  the  State 
or  by  combining  both  means  of  assistance. 

Another  form  of  compensation  consists  in  allowing 
dutv-free  importation  of  raw  or  unfinished  materials 
needed   by  industries   having   protective   value,   in 


lOO    The.  Future  of  German  Industrial  Exports 

order  to  satisfy  the  demand  in  question;  in  many- 
cases  a  temporary  exemption  from  duty,  often  only  a 
moderation  of  duty,  will  suffice. 

Besides  the  support  and  preferments  explained  in 
the  previous  paragraph  which  are  to  be  granted  to 
industries  having  protective  value ^  compensations  should 
he  devised  in  the  interest  of  the  entire  export  trade^  in 
the  form  of  export  premiums^  duty-  reductions  and 
-exemptions, 

A  TEMPTING  BARGAIN  IN  PREMIUMS 

It  will  be  the  duty  of  the  representatives  of  in- 
dustrial commerce  in  our  foreign  embassies  to  point 
out  to  the  agents  of  foreign  concerns  that  the  in- 
terests of  their  own  country  will  be  served  by  placing 
certain  industries  of  Germany  in  a  position  to 
supply  their  country  cheaply.  If  this  hint  is  well 
received,  then  the  next  task  of  the  representatives 
of  industrial  commerce  will  be  to  inquire  into  what 
kinds  of  compensation  foreign  countries  grant  to 
German  industries  whose  goods  they  expect  to  import 
at  a  certain  minimum  price,  and  then  to  induce  the 
proper  authorities  in  the  country  in  question  to  grant 
these  compensations  permanently  or  temporarily. 
Such  compensations  might  for  instance  take  the 
form  of  freight  rebates  upon  the  transportation 
routes  which  lead  to  Germany,  or  the  form  of  foreign 
export  premiums  upon  raw  materials  which  the  Ger- 
man industry  in  question  needs  for  the  sake  of  cheap 
production,  and  which  are  produced  in  the  foreign 
country  itself.     These  compensations  will  of  course 


Diplomacy  the  Adva7ice  Gu^rd  tox 

have  reference  only  to  such  amounts  of  raw  materials 
as  correspond  to  the  amounts  of  finished  products 
shipped  from  Germany  to  the  country  in  ques- 
tion. 

It  will  he  the  task  of  our  diplomatic  representatives 
to  secure  special  inducements  from  foreign  countries 
for  our  industries  of  protective  value^  whose  products 
are  needed  by  the  foreign  countries. 

In  return  for  these  inducements,  Germany  will 
grant  freight  rebates  to  goods  passing  through  her 
territory  on  the  way  to  the  foreign  countries.  The 
feasibility  of  mutual  compensations,  for  the  purpose 
of  making  sure  that  both  parties  get  the  raw  materials 
and  manufactured  articles  they  need,  is  too  self- 
evident  to  require  further  discussion.  If,  in  the 
interest  of  industrial  exports,  compensations  of  such 
a  nature  as  to  injure  one  domestic  industry  while 
benefiting  another  are  necessary,  recourse  will  again 
be  had  to  the  general  guarantee  fund  to  indemnify 
the  former  for  its  loss.  It  is  plain  therefore  that  com- 
pensations giving  rise  to  such  loss  ought  only  to  be 
granted  with  the  consent  of  the  highest  authorities 
in  industry.  Here  again  we  find  that  from  every 
point  of  view  an  uninterrupted  contact  between 
government  officials  and  industrial  authorities  is 
necessary.  The  guiding  lines  for  mutual  compensa- 
tions are  established  by  commercial  treaties. 

The  export  trade  can  also  he  encouraged  hy  muttial 
compensations  hetween  the  countries  of  import  and 
exporty  such  that  hoth  countries  will  always  find  their 
needs  supplied 


I02     Thj  Future  of  'German  Industrial  Exports 

THE   PRIZE  BAIT  OF  THE   PRUSSIAN  EMBASSY 

Finally  we  can  imagine  a  case  where,  on  account 
of  the  attitude  of  some  foreign  country,  the  peaceful 
growth  of  Germany's  industrial  exports  will  appear 
possible  only  if  we  consent  to  the  transplanting  of  an 
especially  important  industry  to  that  country. 
So  far  as  our  own  industrial  circles  are  concerned — 
in  other  words,  so  far  as  concerns  the  owner  of  the 
industry  to  be  transplanted — opposition  to  this 
demand  will  be  met  with  only  in  the  rarest  cases. 
It  is  even  imaginable — capital  is  always  selfish— 
that  suggestions  leading  a  foreign  country  to 
demand  a  compensation  of  this  sort  will  come  by 
roundabout  ways,  the  starting  point  of  which,  how- 
ever, will  be  found  in  our  own  capitalist  circles  in- 
terested in  the  deal.  From  earlier  explanations  it 
appears  that  the  most  permanent  protection  for  the 
entire  manufacturing  export  trade  lies  in  those  very 
industries,  the  transplanting  of  which  to  foreign 
countries  must  be  prevented.  It  may  indeed  be 
possible  that,  in  carefully  weighing  the  advantages 
and  disadvantages,  the  balance  sinks  on  the  side  of 
permitting  the  transplantation,  but  it  is  not  very 
probable  that  the  advantages  will  permanently  out- 
weigh the  disadvantages.  There  will  be  greater 
likelihood  of  the  permission  being  granted  if  undenia- 
ble proof  can  be  submitted  that  a  considerable  number 
of  other  industries  not  yet  transplanted  are  at  hand, 
to  make  up  for  the  loss  to  the  sum  total  of  protective 
value  incurred  by  the  transplanting  of  an  industry. 


-Diplomacy  the  Advance  Guard  103 

Since  the  number  of  such  especially  valuable  in- 
dustries— valuable  in  reference  to  their  protection 
for  industrial  exports — is  not  too  large,  the  question 
whether  such  a  proof  will  be  possible  must  for  the 
present  be  passed  over.  Here  also  we  should  repeat 
our  oft-mentioned  admonition  not  to  put  much  trust 
in  treaties.  No  one  after  all  can  guarantee  that, 
after  an  industry  has  actually  been  transplanted 
into  a  foreign  country,  that  country  will  not  find 
some  excuse  or  pretext  for  refusing  to  perform  what 
it  has  guaranteed  by  treaty  in  return.  It  is  also 
not  to  be  overlooked  that  an  industry  transplanted 
to  one  foreign  country  lessens  beforehand  the  general 
protection  available  against  a  second  foreign  country. 
For  suppose  Germany  decrees  an  embargo  upon  the 
products  of  this  very  industry  as  against  this  second 
foreign  country,  as  a  protective  measure  for  certain 
other  exports.  The  transplanted  industry  could 
scarcely  be  prevented  from  supplying  that  country. 

If  these  possible  results  are  taken  into  considera- 
tion it  then  appears  that  the  transplanting  of 
a  valuable  industry,  hitherto  only  pursued  in  Ger- 
many, to  one  foreign  country  is  equivalent  to  trans- 
planting it  to  the  whole  outside  world  without  the 
possibility  of  our  getting  from  the  world  an  equiva- 
lent service.  If,  therefore,  advantages  are  gained 
from  the  one  foreign  country,  these  are  ofFset  by  the 
immeasurable  disadvantages  which  arise  from  our 
export  trade  having  once  and  for  all  unconditionally 
resigned  a  powerful  protective  weapon  against  the 
rest  of  the  world.     Such  a  procedure  could  indeed 


I04      The  Future  of  German  Industrial  Exports 

scarcely  be  consented  to,  even  if  momentarily  alluring 
advantages  should  be  gained  by  it.  Not  momentary 
value  is  of  importance  but  permanent  future  value. 

Compensations  in  the  form  of  permission  to  trans- 
plant valuable  industries  to  foreign  countries  are  not 
allowable. 


/N  ORDER  to  accomplish  their 
programme,  the  commercial 
war  lords  of  Essen  and  Hamburg 
agree  that  absolute  and  dictatorial 
power  shall  remain  in  the  German 
''State/'  It  is  to  retain  the  ''Divine 
Righf  by  which  it  can  forthwith 
commandeer  those  minerals  that 
are  the  life  blood  of  industry;  to 
sentence  labouring  men  for  life  to 
any  pursuit  at  any  wages,  and  hedge 
them  around  with  jailers;  to  draft 
experts  and  captains  of  industry 
upon  service  determined  by  the 
General  Staff;  to  decree  tariffs,  em- 
bargoes, freigh  t  ra  tes,  reba  tes,  prem  - 
iums  and  subsidies  at  will;  to  levy 
"contributions^'  upon  all  business 
and  all  workmen  alike,  disposing 
thereof  as  it  chooses,  and  to  direct 
the  personal  actions,  aspirations, 
endeavours,  and  rewards  of  all  men 
of  scientific,  technical,  or  financial 
capacity.  Not  only  personal 
liberty,  but  the  immortal  spark  of 
genius  is  to  be  chained  to  the  Im- 
perial chariot  wheels. 


CHAPTER   EIGHT 

A  FEUDAL  SYSTEM  OF  COMMERCE 

The  Panacea  of  Arbitrary  Power — The  Unquestioned  Command 
of  Supplies — Dispersing  Workmen's  Unions — ^The  Universal 
Levy  on  Capital  and  Labour — State  Ownership  of  the  Individual 
— Jurisdiction  Over  the  Minds  of  Scientists. 

5.  State  Protection 

THE  work  of  strengthening  and  safeguarding 
German3'^'s  export  trade  will  only  be  accom- 
panied by  permanent  success  if  those  indus- 
tries which  exhibit  special  protective  value  are  as- 
sured of  a  proportionate  amount  of  state  protection. 
This  protection  will  involve:  guarding  against  inter- 
ruptions in  manufacture,  such  as  might  arise  in 
procuring  raw  materials  and  machinery,  and  in 
labour  troubles.  It  will  make  right  losses  which  are 
incurred  through  regulation  of  the  export  trade,  keep 
manufacturing  secrets  intact  and  prevent  movements 
of  labour  and  capital  which  endanger  these  secrets. 
State  protection  will  also  supplement  the  work  of  the 
associations  which  were  formed  by  the  various  trade 
interests  for  accompHshing  these  same  tasks. 

THE    UNQUESTIONED   COMMAND  OF   SUPPLIES 

It  has  already  often  been  pointed  out  that  the 
starting  point  of  all  protective  measures  lies  in  mak- 

106 


A  Feudal  System  of  Commerce  107 

ing  secure  the  supply  of  raw  materials.  Through 
suitable  laws  and  regulations  the  State  will  have  to 
take  care  that  under  all  circumstances  protective 
industries  must  be  supplied  from  within  our  own 
country  with  the  raw  materials  and  machinery  which 
they  need  for  the  maintenance  of  their  business  and 
for  the  production  of  unsurpassable  goods.  It  will 
be  the  task  of  the  State  to  see  that  there  are  no 
interruptions  in  the  connection  between  raw-material 
producers  and  their  customers;  that  industries  of 
protective  value  are  supplied  before  all  other  buyers; 
and  that  these  protective  industries  be  charged  only 
such  prices  for  their  supplies  as  are  compatible  with 
the  price  limits  which  must  be  imposed  upon  their 
output.  Where  such  moderate  charges  are  im- 
possible through  the  nature  of  momentary  circum- 
stances, the  difference  which  is  having  an  injurious 
effect  upon  the  price  at  which  the  protective  indus- 
tries can  manufacture  must  be  made  up  by  the  State 
in  a  form  which  balances  inequalities  without  making 
noticeable  inroads  upon  state  finances.  For  this 
purpose  it  will  not  be  absolutely  necessary  to  pay 
out  cash  subsidies.  Export  premiums,  freight  re- 
bates, etc.,  in  amounts  determined  by  the  price 
difference  to  be  equalized,  will  suffice  in  most  cases. 
The  producer  of  raw  materials  can  also  be  induced 
to  a  corresponding  moderation  in  price  if  the  State 
assures  him  in  return  certain  contracts  at  maximum 
prices.  For  then  he  can  increase  the  value  of  such 
contracts  by  postponing  the  time  of  fulfilment  to 
a    period    of    lower    market.     Encouragements    in 


ic8    The  Future  of  German  Industrial  Exports 

other  ways  may  be  given  to  the  producer  to  induce 
him  to  a  moderation  in  price. 

The  state  protection  begins  with  making  secure  the 
sources  upon  which  the  manufacturers  of  the  protective 
industries  depend. 

DISPERSING   workmen's    UNIONS 

In  general  it  will  be  easier  to  safeguard  the  supply 
of  raw  materials  than  to  safeguard  the  manufacturing 
process  itself,  the  greatest  danger  to  which  is  to  be 
found  in  the  relations  between  employer  and  em- 
ployee. Both  put  their  personal  interests  foremost. 
The  former  will  try  to  raise  the  amount  of  work 
required  (to  take  a  very  bald  example)  and  to  lower 
wages;  the  latter  will  strive  for  the  opposites.  It  will 
be  the  duty  of  the  State  to  interpose,  and  mediate 
between  them  or  bring  about  a  reconciliation.  Be- 
fore all  else,  however,  it  ought  to  take  care  that 
points  of  friction  which  could  give  rise  to  differences 
of  opinion  are  forthwith  banished.  Work  and  wages 
must  be  adjusted  so  that  the  course  of  manufacture 
may  remain  unvarying.  Every  interruption  in  the 
activity  and  development  of  a  protective  industry 
has  an  injurious  effect  upon  the  whole  manufacturing 
export  trade,  because  its  very  protective  value,  at 
least  for  the  time,  runs  the  risk  of  not  being  con- 
sidered as  a  factor  of  importance  which  can  be  reck- 
oned upon. 

The  solution  of  this  question  is  all  the  more  diffi- 
cult because  here  the  generally  accepted  principles 
can  scarcely  be  applied.     Rather  will  the  regulations 


A  Feudal  System  of  Commerce  109 

to  be  issued  in  this  connection  have  to  confine  them- 
selves to  pointing  out  the  general  guiding  lines  in 
accordance  with  which  one  must  proceed.  In  every 
case  mischief-makers  who  try  to  advance  their  per- 
sonal interests  to  the  injury  of  protective  value 
are  to  be  severely  punished.  Certain  statutory 
limits  must  be  placed  upon  the  right  of  forming  com- 
binations, whether  it  be  invoked  by  proprietors  or 
by  subordinates,  to  the  injury  of  a  protective  indus- 
try. It  is  not  a  question  of  the  individual,  but  of 
the  whole!  More  than  ever  it  will  be  necessary  to 
give  all  co-workers  in  a  protective  industry  a  share 
in  its  earnings.  If  all  have  a  common  interest  no 
one  will  then  attempt  an  injury  to  it. 

Persons  who  are  listed  as  employees  in  the  rolls 
of  protective  industries  are  subject  to  especially 
strict  rules  in  reference  to  the  preservation  of  manu- 
facturing secrets  and  to  safeguarding  the  industry 
against  transplantation.  Danger  of  the  latter  comes 
largely  from  the  higher  officers  among  the  em- 
ployees, and  often  from  the  management  itself  or 
from  the  capitalists  interested  in  the  business. 
The  regulations  will  have  to  provide  that  the  officers 
are  bonded  to  the  proper  amount,  and  that  the  stock 
of  the  concern  can  be  requisitioned  and  called  in 
when  necessary.  They  must  provide  that  no  one 
person  can  ever  become  possessor  of  the  entire  secret 
of  manufacture  wherever  such  a  thing  is  avoidable, 
that  the  way  the  manufacture  is  conducted  never 
discloses  the  secret  itself,  and  finally  that  aliens  can 
find  no  employment  in  such  industries. 


no      The  Future  oj  German  Industrial  Exports 

Industries  of  protective  value  can  be  kept  in  uninter- 
rupted operation  only  hy  the  cooperation  of  the  State, 
The  State^  primarily y  has  the  duty  of  guarding  against 
transplantation. 

THE    UNIVERSAL   LEVY   ON   CAPITAL   AND   LABOUR 

If  it  becomes  necessary  to  place  an  embargo  on  the 
shipments  of  certain  protective  industries  to  foreign 
countries  for  the  benefit  of  our  export  trade,  the 
industries  hit  by  the  embargo  will  be  decidedly  in- 
jured if  it  leads  to  a  cessation  of  work.  The  em- 
ployees will  also  suffer.  Since  the  embargo  is 
dictated  by  the  State,  the  latter  has  the  duty  of 
providing  compensation,  regardless  of  whether  it 
itself  pays  this  or  not.  If,  therefore,  the  State  be 
granted  by  law  the  right  to  lay  an  embargo  (the 
recognition  of  this  right  is  required  in  the  interest 
of  the  manufacturing  export  trade),  ways  and  means 
of  procuring  compensation  funds  must  be  made 
plain,  and  the  principles  which  are  to  govern  the 
payment  of  the  compensations  to  the  claimant  must 
be  defined. 

As  has  been  explained  earlier,  the  parties  who 
benefit  by  the  embargo,  or  on  behalf  of  whose  exports 
the  embargo  was  laid,  are  to  be  called  upon  to  furnish 
compensation  for  the  embargoed  industries  and  their 
workmen.  The  benefited  parties  include  not  only 
employers  but  also  the  employees  in  their  service; 
it  seems  reasonable  that  both  should  be  Hable  to 
furnish  compensation,  in  proportion  of  course  to  the 
amount  of  profit  which  has  come  to  them.     This 


A  Feudal  System  of  Commerce  in 

liability  becomes  oppressive  when  it  must  be  met 
without  preparation.  The  state  regulations  will 
therefore  go  further  and  specify  in  what  form  and  to 
what  extent  the  compensation  funds  are  to  be  pro- 
vided beforehand,  in  what  way  the  contributions 
from  all  liable  parties  are  to  be  collected,  and  in 
what  manner  repayment  is  to  take  place  after  the 
embargo  is  raised. 

That  repayment  is  justified  has  already  been 
shown;  for  after  the  embargo  is  Hfted  the  industries 
which  were  under  it  may  expect  increased  manufac- 
turing activity  and  increased  sales  which  will  last 
until  the  normal  supply  of  the  consumer  is  reached. 
As  a  matter  of  principle  the  repayment  ought  to 
begin  with  the  commencement  of  this  increased 
activity  and  to  end  when  normal  conditions  are 
resumed.  Since  employers  as  well  as  employees  of 
the  embargoed  industries  share  in  the  benefits  of 
compensation,  both  must  be  called  upon  for  repay- 
ment. In  all  probability  deposits  to,  and  with- 
drawals, from  the  compensation  fund  will  represent 
an  approximately  symmetrical  wavy  line,  the  first 
crest  of  which  is  represented  by  the  deposits  (pre- 
paratory fulfilment  of  the  duty  of  compensation), 
the  first  trough  by  the  compensation  (to  the  embar- 
goed industry  and  its  employees),  and  the  second 
crest  by  the  repayment  (made  by  the  industry  and 
employees  after  the  embargo  is  lifted),  etc.  The 
only  actual  loss  of  money  will  therefore  be  through 
the  necessary  interest  payments  which  in  justice 
ought  to  be  made  by  all  the  parties  concerned. 


112      The  Future  oj  German  Industrial  Exports 

State  protection  must  include  making  good  and 
regulating  all  deficits  caused  by  temporary  embargoes 
on  protective  industries  in  the  interest  of  industrial 
exports. 

If  embargoed  industries  are  to  be  able  to  supply 
the  increased  demand  for  their  products  after  the 
embargo  is  Hfted,  they  ought  to  continue  operation 
as  much  as  possible  during  the  time  their  shipping 
is  prohibited;  in  other  words,  they  should  work 
upon  a  stock-surplus.  The  claims  upon  the  com- 
pensation fund  will  in  this  case  be  higher  than  if 
they  shut  down,  for,  should  they  stop  work,  the 
fund  would  only  be  relied  upon  for  profits.  When 
operations  are  continued,  however,  raw  materials 
will  have  to  be  supplied,  and  running  expenses  met, 
while  at  the  same  time  the  foreign  country  affected  by 
the  embargo  will  perhaps  withhold  payments.  The 
compensation  fund  is  to  be  estimated  with  these  facts 
in  mind. 

The  effective  carrying  out  of  the  embargo,  that 
is,  the  prevention  of  deliveries  of  embargoed  pro- 
ducts by  indirect  routes,  is  the  business  of  the  State. 
It  therefore  has  the  duty  of  formulating  measures 
of  control,  which  will  render  the  embargo  effective. 

STATE    OWNERSHIP   OF   THE   INDIVIDUAL 

Capital  will  be  hard  hit  not  only  by  embargo 
measures,  but  still  more  by  the  transplanting  of  the 
protective  industries  being  forbidden.  These  in- 
dustries can  be  endangered  by  movements  of  labour, 
where   skilled   workmen    are   involved.     Protection 


A  Feudal  System  of  Commerce  113 

might  without  a  doubt  be  had  against  this  danger  by 
placing  the  labour  Hsts  under  state  supervision,  in 
the  same  way  that  this  was  done  in  certain  industries 
during  the  war,  with  success  and  to  the  general 
satisfaction — also  to  that  of  the  employees.  This 
form  of  militarizing  invaluable  industries  can  scarcely 
be  avoided  m  spite  of  the  opposition  it  will  be  exposed 
to  in  times  of  peace.  Increased  participation  in 
profits  will  make  this  compulsion  easier  to  bear; 
favourable  provision  for  old  age  will  considerably 
mollify  it.  Constraint  must  likewise  be  put  upon 
capital,  if  it  shows  itself  stubborn  in  pushing  through 
transplantings.  Then,  too,  we  must  always  reckon 
with  short-sighted  and  narrow-hearted  capital.  It 
is  possible  that  leading  capitaHsts  might  resolve  to 
shut  down  the  protective  industry  if  its  transplanting 
is  prevented,  or  that  they  may  refuse  to  grant  further 
capital  for  a  necessary  expansion  of  this  industry.) 
In  such  cases  the  State  must  step  in  without  fear  or 
favour;  the  right  of  expropriation  must  be  estab- 
lished by  law  for  this  purpose.  If  there  is  danger 
that  the  refractory  individuals  may  find  themselves 
relieved  of  their  entire  capital,  then  there  will  scarcely 
be  damaging  resistance  from  the  capitalist  side. 

The  State  must  he  given  the  right  to  use  coercive 
measures  in  preventing  the  withdrawal  of  workers  and 
capital  from  protective  industries. 

JURISDICTION    OVER   THE    MINDS    OF    SCIENTISTS 

In  all  these  protective  measures  the  State  will  find 
good  support  in  all  industrial  and  technical  associa- 


114     The  Future  of  German  Industrial  Exports 

tions  which  work  in  the  interest  of  the  entire  manu- 
facturing export  trade.  To  prevent  damage  being 
done  by  the  special  interests  of  one  kind  of  industry, 
these  various  associations  must  be  united  into  a 
common  body  in  the  supreme  control  of  which  the 
State  is  to  have  a  deciding  voice.  The  better  these 
bodies  and  the  special  representatives  of  the  State 
cooperate,  the  more  effective  becomes  the  state 
protection  of  industries  and  of  their  export  trade ! 


7UST  as  every  suitable  human 
being  in  the  empire  was  drafted 
into  the  army,  so  every  plant 
in  the  Kingdom  is  to  be  conscripted 
into  the  German  Industrial  Army 
for  the  export  war.  Each  industry 
will  constitute  an  Army  Corps,  divide 
ed  into  five  divisions — scientific,  in^ 
dust  rial,  mercantile,  commercial, 
and  financial.  Presiding  over  each 
division  will  be  a  generalissimo. 
These  generalissimos,  together  with 
a  controlling  number  of  state  funC" 
tionaries,  will  constitute  the  five 
great  Boards  of  Strategy,  whose 
heads  in  turn  will  be  the  Great 
General  Staff,  the  fountain  head  and 
final  dictator  of  the  campaign. 

The  Scientific  Division  will  draft 
into  service  all  inventors  and  con^ 
duct  in  carefully  formulated  detail 
the  production  and  application  of 
those  inventions  and  discoveries  re^ 
quired  by  the  Industrial  Division, 
which  in  turn  will  marshal  them 
where  most  needed,  and  act  as  an 
immense  clearing  house  andinform^ 
ation  ]bureau  for  all  technical  im." 
provements. 


CHAPTER   NINE 

ORGANIZATION  OF  THE  GERMAN  EXPORT 
ARMY 

The  Army  Corps  of  the  Commercial  OfFensive — Industrial 
Divisions  in  Action — ^The  Board  of  Strategy — The  General 
Staff — ^Tactics  of  the  Scientific  Division — Drafting  and  Drilling 
the  Inventors — Assembling  the  Fruits  of  Genius — Capturing 
Foreign  Inventions — ^The  Industrial  Division,  the  Compulsory 
Information  Bureau. 

6.  Industrial  Protective  Unions 

A  SPLITTING  up  of  state  protection  is  to 
be  avoided  under  all  circumstances.  Each 
individual  manufacturer  is  to  participate  in  it, 
yet  not  directly,  otherwise  the  number  of  negotia- 
tions and  investigations  would  become  endless, 
friction  between  the  individual  manufacturers  who 
persist  in  putting  their  own  special  interests  foremost 
would  be  unavoidable,  oversight  of  the  justification 
of  individual  demands  would  be  lost,  and  chaos 
would  result,  bringing  severe  injury  to  the  export 
trade. 

industrial  divisions  in  action 

The  protective  power  emanating  from  the  State's 
authority  must  be  thought  of  as  the  composite  result 

ii6 


Organization  of  the  Export  Army  117 

of  the  influence  exercised  by  separate  federations 
which  serve  scientific,  industrial,  mercantile,  com- 
mercio-industrial,  and  financial  purposes,  and  whose 
basis  is  formed  by  the  individual  kinds  of  industry. 
In  this  way  it  is  impossible,  from  the  very  first, 
for  the  selfish  interests  of  a  single  form  of  industry 
to  win  the  upper  hand  and  injure  those  of  other 
industries.  Each  influence  in  the  composite  whole 
represents  within  the  bounds  of  its  own  federation 
another  whole,  the  component  parts  of  which  are 
to  be  looked  upon  as  protective  influence  for  the 
individual  kind  of  industry.  Since  each  of  the 
above-named  federations  exerts  part  of  its  influence 
upon  every  kind  of  industry,  the  result  is  that  every 
kind  of  industry  stands  under  five  diff^erent  protective 
influences  (those  protecting  scientific,  industrial, 
mercantile,  commercio-industrial,  and  financial  in- 
terests). These  influences  thus  form  a  polygon, 
whose  results  is  the  centralized  state  protection  upon 
which  the  kind  of  industry  in  question  can  reckon. 

THE    BOARD    OF    STRATEGY 

As  long  as  the  influence  of  each  individual  kind  of 
industry  is  properly  balanced  (that  is,  no  commercio- 
industrial  measures,  for  instance,  are  carried  out  at 
the  expense  of  manufacture,  or  no  financial  measures 
at  the  expense  of  commercial  industry,  etc.),  the 
resulting  whole,  in  its  force  and  nature,  will  not  be 
out  of  proportion,  and  the  entire  protective  system 
will  therefore  be  at  equilibrium.  Consequently, 
the  State's  protection  attains  undiminished  uniform 


Il8    The  Future  of  German  Industrial  Exports 

efFectiveness;  the  whole  protective  system  works 
smoothly.  On  the  other  hand  every  change  in  the 
combinations  of  influence  will  affect  the  great  whole, 
and  will  therefore  be  immediately  detected.  Thus 
it  admits  of  being  removed  without  delay.  In  other 
words:  every  selfish  measure,  which  is  detrimental 
to  industrial  exports  in  general,  and  which  is  not  in 
harmony  with  the  whole  protective  system,  can  at 
once  be  recognized  and  stopped. 

State  protection  affects  the  federations  directly.  The 
latter  conduct  it  to  the  indivdual  kinds  of  industry 
and  through  these  to  the  individual  industries. 

THE    GENERAL    STAFF 

In  this  Statement  are  given  the  guiding  lines  for  the 
construction  of  the  state  protective  organization  for 
which  it  is  a  matter  of  indifference  whether  the  feder- 
ations are  entirely  of  a  governmental  nature  (state 
officials)  or  entirely  of  an  industrial  nature  (boards), 
or  of  the  two  combined.  From  the  introductory 
discussion  it  is  to  be  seen  that  the  mixed  system  is 
given  the  preference,  for  this  avoids  in  equal  measure 
bureaucratic  clumsiness  and  inflexibility  and  the 
dominating  influence  of  selfish  special  interests  either 
from  the  lesser  unions  in  a  federation  or  from  individ- 
uals in  general.  In  the  mixed  system  the  state  dele- 
gates are  personally  disinterested  individuals — 
therefore  unselfish;  the  delegates  of  industry  are 
personally  interested — therefore  selfish.  The  latter 
will  make  demands,  the  former  will  bring  them 
within  reasonable  limits  in  the  interest  of  industrial 


Organization  of  the  Export  Army  119 

exports  as  a  whole.  Thus  the  state  delegates  will 
act  as  a  counterpoise. 

Such  a  federation  is  to  be  compared  to  a  large 
reservoir  into  which  flow  the  carefully  defined  pro- 
tective measures  of  the  State,  worked  out  theoreti- 
cally for  the  time  being,  and  also  all  the  special 
interests  of  industry.  Here  they  mingle,  to  be 
united  at  last  in  a  quiet  and  clarified  whole,  the 
pressure  (protective  eff^ect)  of  which  finds  its  outlet 
through  the  proper  channels. 

Protective  measures  for  the  export  trade  are  issued  by 
a  single  body  which  is  composed  of  state  and  industrial 
representatives  and  which  hands  down  its  instructions 
to  the  individual  federations. 

The  federations  are  elected  by  industry,  perhaps 
best  by  the  governors  of  the  sub-associations.  They 
will  include  in  their  membership  a  state  representa- 
tive, who  will  have  the  duty  of  making  reports  to 
the  state  delegates  in  the  supreme  body  which  is 
made  up  according  to  the  mixed  system.  The 
number  and  kind  of  sub-associations  are  given  by 
the  number  and  kind  of  those  principal  industries 
which  are  concerned  in  the  manufacturing  export 
trade.  It  will  be  advantageous  for  the  separate 
sub-associations  to  organize  themselves  again  into 
sections  of  a  scientific,  industrial,  mercantile, 
commercio-industrial,  and  financial  nature.  The 
chairmen  of  these  five  sections  constitute  the  director- 
ate of  the  sub-associations  and  are  at  the  same 
time  members  of  the  appropriate  federation  and 
reporters  for  their  trade  specialty  in  it  (for  instance 


I20    The  Future  of  German  Industrial  Exports 

the  chairman  of  a  commercio-industrial  section  is 
a  member  of  the  commercio-industrial  federation). 

TACTICS    OF   THE    SCIENTIFIC    DIVISION 

The  duties  of  the  scientific  federation  will  be: 

To  work  out  proposals  for  the  practical  use  of  new 
scientific  improvements  in  the  interest  of  protection 
for  industrial  exports. 

To  arrange  competitions  with  prizes  for  those 
who  can  contrive  substitutes  for  raw  materials  which 
are  now  supplied  by  foreign  countries  hostile  to  our 
exports.  In  this  way  our  own  industries  will  be  made 
less  dependent. 

To  go  over,  revise,  and  make  reports  on  the  solu- 
tions which  have  been  submitted. 

To  exert  an  influence  over  state  and  private  testing 
stations. 

To  provide  the  scientific  answer  to  the  problems 
arising  in  every-day  work. 

To  watch  for  and  follow  up  all  inventions  and  im- 
provements in  foreign  countries. 

To  centralize  all  scientific  research,  so  far  as  it 
might  have  an  influence  upon  industrial  exports. 

To  publish  a  scientific  journal  for  the  exclusive 
purpose  of  promoting  the  export  trade,  and  of 
keeping  the  parties  interested  in  it  informed. 

Many  scientific  gains  remain  forever  within  the 
scholar^s  study  in  which  they  originated,  because  of 
exaggerated  modesty,  selfishness,  or  a  lack  of  practi- 
cal knowledge.  They  must  be  called  forth  from 
obscurity  and  be  turned  over  to  men  of  afi^airs 
who,  from  an  industrial  standpoint,  will  separate 
the  wheat   from   the   chaffs.     The  directors   of  the 


Organization  of  the  Export  Army  121 

federation  must  see  that  justice  is  done  to  the 
scholar's  moral  and  financial  rights.  It  will  therefore 
be  necessary  to  create  a  bureau  which  will  collect 
scientific  improvements,  turn  them  over  to  practical 
application,  and  watch  over  and  encourage  this 
application  itself  (most  easily  accomplished  by  dele- 
gating the  scientific  inventor  as  its  agent).  jThis 
bureau  of  collection  must  work  hand  in  hand  with  a 
bureau  for  testing  out  scientific  improvements, 
which  has  the  duty,  when  necessary,  of  providing  the 
necessary  financial  interest  of  the  inventor. 

It  is  the  duty  of  the  scientific  federation  to  put  to 
practical  test  all  scientific  improvements  connected 
with  the  export  trade. 

DRAFTING    AND    DRILLING    THE    INVENTORS 

Foreign  countries  hostile  to  our  exports  can  take 
an  especially  effective  stand  against  our  industrial 
trade  when  they  have  large  or  exclusive  control 
over  raw  materials  which  German  industry  can  not  do 
without.  (They  ought  seldom  to  have  exclusive 
control.)  The  course  of  the  war  thus  far  has  taught 
us  that  our  enemies  know  how  to  use  such  weapons. 
However,  it  has  also  shown  that  German  science  did 
not  remain  idle.  On  the  contrary  it  found  in  this  a 
new  stimulus  to  produce  substitutes  for  raw  materials 
withheld  by  foreign  countries.  Since  we  must  reckon 
that  foreign  countries  may  make  profitable  use  of 
monopolies  in  raw  materials  also  in  the  future,  it 
will  be  the  duty  of  the  scientific  federation  not  only 
to  take  the  path  already  used  by  individuals  in  pro- 


122     The  Future  of  German  Industrial  Exports 

ducing  substitutes,  but  also  to  broaden  it  by  means 
of  science  and  organization.  It  should  make  clear 
the  needs  of  the  situation  and  should  give  the  in- 
struction and  suggestions  necessary  for  the  manu- 
facture of  substitutes  in  sufficient  quantities.  La- 
boratories and  testing  stations  will  be  called  upon 
for  joint  assistance.  Under  the  guidance  of  the 
federation  men  trained  in  theory  will  join  with  the 
men  from  the  ranks  of  experience  in  working  out  the 
necessary  directions  for  the  application  and  use  of 
the  substitutes.  Through  the  cooperation  of  govern- 
ment experts,  mining  operations  given  up  because 
of  their  poor  productivity  in  comparison  with  foreign 
mines  will  be  given  a  new  and  more  practical  ex- 
ploitation. New  combinations  of  electrical  and 
chemical  devices  are  to  be  proposed  in  order  to  gain 
independence  of  foreign  countries  in  the  market  for 
raw  materials.  With  the  increase  of  this  indepen- 
dence, our  protective  values  rise,  and  the  commercio- 
industrial  weapons  which  can  be  used  against  foreign 
countries  hostile  to  our  exports  become  more  effective. 

ASSEMBLING   THE    FRUITS    OF   GENIUS 

In  order  to  enlist  even  the  farthest  circles  in  this 
work  of  preparedness  the  scientific  federation  will 
work  out  those  principles  which  underlie  the  problem 
of  producing  substitutes,  will  list  in  logical  order  the 
substitutes  to  be  worked  out,  and  will  make  corres- 
ponding offers  of  prizes.  The  solutions  which  are 
sent  in  must  be  judged  primarily  from  the  standpoint 
of  the  principles  which  have  been  laid  down,  and 


Organization  of  the  Export  Army  123 

secondarily  in  reference  to  the  possibility  of  manu- 
facturing the  proposed  substitutes,  and  using  them 
profitably  in  industry.  To  estimate  these,  the  repre- 
sentatives of  the  proper  industries  are  to  be  given  a 
place  in  the  judging  bodies.  If  the  solutions  in 
question  are  recognized  as  suitable  substitutes  the 
scientific  federation,  in  common  with  the  industrial 
federation  to  be  discussed  farther  on,  has  to  deter- 
mine ways  and  means  to  carry  out  the  manufacture 
of  the  substitutes  in  bulk.  They  will  then  be  de- 
livered to  the  industries  where  they  are  needed 
through  the  commercio-industrial,  or,  as  the  case 
may  be,  through  the  mercantile  federation. 

It  is  a  further  duty  of  the  scientific  federation  to 
produce  or  provide  a  way  for  the  production  of  sub- 
stitutes for  important  raw  materials  that  can  be 
secured  only  from  foreign  countries.  Dangerous 
weapons  against  our  export  trade  can  thus  be 
wrested  from  the  hands  of  countries  which  are  hostile 
to  our  exports. 

CAPTURING   FOREIGN    INVENTIONS 

The  scientific  federation  will  create  an  office  for 
collecting  all  international  technical  improvements 
of  a  theoretical  anYi  practical  nature,  will  arrange 
incoming  material  according  to  industries,  will  make 
comparisons  with  similar  or  related  German  im- 
provements, and  will  deduce  from  new  material  the 
practical  lessons  to  be  applied  to  German  industry. 
In  order  to  start  the  process  of  application  it  will 
arrange  the  material  according  to  the  various  kinds 


124    The  Future  of  German  Industrial  Exports 

of  industry,  after  having  summarized  and  united  it, 
and  will  add  the  theoretical  and  practical  explana- 
tions which  will  make  it  clear  to  the  man  of  industry. 
The  material  should  then  be  passed  on  to  the  in- 
dustrial sections  of  the  proper  kinds  of  industry. 
These  sections  will  get  in  touch  with  the  individual 
concerns,  so  that  the  proposals  of  the  scientific  federa- 
tion can  be  put  into  actual  practice.  Not  only 
theoretical  and  industrial  requirements  but  also 
commercio-industrial,  and  above  all  financial  con- 
siderations will  of  course  play  their  part  in  such  a 
procedure. 

We  thus  can  see  that  uninterrupted  cooperation 
goes  on  between  the  individual  federations,  their 
subdivisions,  and  sections.  By  this  cooperation,  the 
consciousness  of  unity  is  strengthened,  selfish  aberra- 
tions are  avoided,  and  there  is  attained  a  state  of 
general  protection  whose  results  will  be  favourable 
for  individual  enterprisers  and  their  export  [trade. 
Everything  which  originates  in  foreign  countries 
or  is  recast  by  them  must  be  weighed  and  tested  by 
this  central  office  in  reference  to  its  superiority  to 
similar  German  improvements  and  in  reference  to 
the  possibility  of  its  utilization  for  the  profit  and 
strength  of  German  industrial  exports. 

Here,  as  with  all  other  associations,  special  value 
should  be  laid  upon  avoiding  all  complication  of 
business  routine  and  upon  speeding  up  all  protective 
activity.  Since  everything  is  destined  finally  for 
use  in  practical  business,  it  must  all  be  dealt  with  in 
a  swift  and  practical  way.     In  matter-of-fact  affairs. 


Organization  of  the  Export  Army  125 

bureaucratic  red  tape  is  to  be  avoided  because  it 
slows  things  up.  We  will  be  in  a  continual  race 
with  foreign  countries  for  the  purpose  of  overtaking 
them,  and  meanwhile  they  are  hardly  going  to  re- 
main idle.  The  more  spiritedly  business  is  dispatched 
between  the  individual  protective  bodies,  the  more 
easily  and  surely  it  will  be  possible  for  us  to  catch  up. 
All  efforts  must  be  directed  toward  blunting  as 
quickly  as  possible  every  new  weapon  which  foreign 
countries  forge  against  the  German  export  trade. 
At  the  same  time,  however,  we  must  invent  new 
weapons  of  defense  by  which  the  protection  of  that 
trade  will  be  increased. 

The  scientific  federation  forms  an  office  for  collecting 
all  technical  improvements  abroad^  and  for  adapting 
these  to  the  use  of  the  German  manufacturing  export 
trade. 

It  appears  that  the  publication  of  a  trade  journal 
is  the  simplest  means  of  info'rming  all  interested 
parties  concerning  all  measures,  organizations,  re- 
searches and  their  results,  tests,  in  actual  work,  and 
the  practical  value  of  innovations,  etc.  This  trade 
magazine  (whose  title  might  for  instance  be,  The 
Industrial  Exporter's  Herald)  will  consist  of  five  main 
divisions  in  accordance  with  the  above-mentioned 
organization,  each  of  which  is  to  be  edited  by  one 
of  the  above-mentioned  federations. 

The  part  of  the  trade  magazine  to  be  edited  by  the 
scientific  federation  will  consist  largely  of  a  periodic- 
ally recurring  enumeration  of  all  domestic  and  foreign 
improvements  important  for  the  export  trade,  their 


126     The  Future  of  German  Industrial  Exports 

industrial  value,  reports  concerning  experiments  with 
substitutes  and  new  work  materials,  instructions  and 
directions,  prize  competitions  and  their  results. 

A  journal  serving  Germany  s  manufacturing  export 
trade  shall  record  the  results  of  the  activity  of  the  five 
federations  and  of  their  associated  and  subordinate 
bodies. 

THE    COMPULSORY   INFORMATION    BUREAU 

The  industrial  federation  will,  in  the  main,  be 
associated  with  the  scientific,  and  will  have  the  duty 
of  arranging  for  the  industrial  appHcation  of  the 
improvements  of  a  domestic  and  foreign  nature, 
submitted  to  it  by  the  scientific  federation,  and  of 
starting  the  manufacture  of  substitutes;  or  by  the 
reverse  process,  it  will  turn  over  to  the  scientific 
federation  requests  for  the  scientific  treatment  of 
new  or  still  incompleted  industrial  problems.  The 
industrial  federation  will  cooperate  with  that  of 
commercial  industry  when  it  becomes  necessary 
to  put  articles  of  export  on  a  better  competitive 
footing  so  far  as  price  goes,  through  contriving 
more  efficient  machinery  and  through  better  utiliza- 
tion of  raw  material. 

In  order  to  prevent  unnecessarily  large  sums  of 
money  from  being  squandered  in  attempts  to  put 
the  fruits  of  scientific  research  into  use,  the  industrial 
federation  will  establish  an  experiment  division  which 
can  supply  all  the  practical  suggestions  which  will 
benefit  the  export  trade.  This  central  office  is 
necessary  in  order  to  keep  research  work  unified  and 


Organization  of  the  Export  Army  127 

to  convey  the  experiences  which  were  gained  with 
the  same  material  by  different  parties  to  all  who 
work  with  it.  The  experiment  division  which  will 
be  conducted  by  practical  men  (delegates  of  the 
industries  in  question),  is  not  to  carry  out  the  work 
of  experimentation  itself,  and  will  therefore  use  no 
experimental  plants.  Its  function  is  to  direct  the 
work  m  the  existmg  state  or  private  stations,  which 
by  their  experience  and  equipment  are  placed  in  a 
position  to  carry  out  the  assigned  work  in  a  practical 
manner,  according  to  all  rules  of  science.  The  same 
problems  will  be  assigned  simultaneously  to  various 
experiment  stations  in  order  that  diverse  results 
and  opinions  may  be  brought  to  bear.  The  various 
results  and  views  will  then  be  compared  by  the 
experiment  division  with  the  cooperation  of  the 
practical  men  who  evolved  them.  So,  in  most 
cases,  a  working  programme  for  the  final  solution  of 
the  assigned  problems  will  be  gained  by  combining 
the  best  practical  details  and  view-points  of  the 
individual  solutions. 

It  will  be  the  duty  of  the  experiment  division  to 
determine  the  numerical  share  of  the  individual 
workers  in  the  practical  solution  in  order  to  obtain  a 
scale  for  their  financial  compensation.  Likewise 
it  will  have  the  duty  of  making  proposals  to  the 
proper  federation  concerning  the  royalties  to  be 
charged  for  the  use  of  the  invention. 

The  industrial  federation  is  called  upon  to  put 
scientific  discoveries  into  practical  use  in  the  interest  of 
strengthening  the  export  trade. 


128      The  Future  of  German  Industrial  Exports 

A  second  department  of  the  industrial  federation 
will  serve  as  an  office  to  collect  all  the  demands  made 
by  practical  industry  upon  science.  Practical  men 
are  often  more  keen-eyed,  because  they  are  under 
the  lash  of  competition.  They  will  comprehend 
more  quickly  the  superiority  of  foreign  products 
because  the  latter  threaten  to  supplant  their  own. 
Cases  will  arise  where  the  industrial  enterpriser 
can  not  overtake  his  competitors  in  technical  matters 
because  he  lacks  certain  scientific  fundamentals, 
and  a  knowledge  of  the  findings  and  suggestions  of 
experts.  In  such  cases  he  will  have  recourse  to  the 
collection  office  of  the  industrial  federation.  It  will 
be  found  that  claims  of  the  same  kind  are  often  made 
upon  this  office.  They  will  then  be  passed  on  to 
the  scientific  federation  to  be  answered.  The 
suggestions  it  makes  will  be  returned  to  the  collection 
office  by  way  of  the  experiment  division  of  the  in- 
dustrial federation,  in  a  practical  form  which  has 
already  been  proven  good  by  experimentation. 
The  collection  office  hands  them  back  to  the  individ- 
uals who  originally  asked  for  the  information,  and 
simultaneously  makes  them  known  to  all  the  proper 
concerns  (through  the  trade  journal). 

The  collection  office  likewise  has  work  to  do, 
viz. :  when  the  manufacturers  send  in  a  call  for  sub- 
stitutes for  certain  raw  materials;  when  the  commer- 
cio-industrial  federation  has  occasion  to  point  out 
that  certain  raw  materials  are  not  sufficiently  utiHzed 
in  comparison  with  the  methods  of  foreign  competi- 
tion;   when    domestic    industry    takes    insufficient 


Organization  of  the  Export  Army  129 

account  of  certain  usable  qualities  in  waste  products; 
and  when  it  appears  that  foreign  competitors  have 
in  use  machinery  of  superior  efficiency,  which  gives 
them  an  industrial  advantage  over  Germany.  Here, 
too,  we  shall  find  that  remarks  and  suggestions  will 
be  made  by  various  parties  on  the  same  subject. 
The  collection  office  will  unite  and  sift  these  and  will 
pass  them  on,  along  with  pertinent  suggestions  in  a 
unified  inclusive  form  to  the  scientific  federation; 
or,  as  the  case  may  be,  it  will  deliver  to  the  inquirers 
the  advice  they  have  sought,  as  it  comes  back. 

The  industrial  federation  has  the  further  task  of 
collecting  the  technical  suggestions  coming  from  in- 
dustrial circles  and  of  giving  these  a  practical  test^  in 
order  that  the  superiority  of  German  industry  may  he 
permanently  maintained. 

All  occurrences  of  a  technical  nature  which  are  of 
interest  to  industry  are  brought  to  general  notice 
by  the  industrial  federation  in  the  common  trade 
journal.  In  these  articles  hints  on  the  practical 
lessons  afforded  by  the  occurrences,  and  their  in- 
fluence in  strengthening  the  export  trade  are  to  be 
given  prominence. 


THE  Field  Marshals  who  are  to 
execute  the  active  manoeuvres 
of  the  coming  trade  war,  will 
operate  from  the  commercial  Divi- 
sion Headquarters,  Theirs  the  duty 
to  snap  out  the  orders,  to  hoard  up 
the  potash,  hold  up  the  shipping, 
slap  on  the  premium  and  distrib- 
ute the  largess  which  will  gather  in 
their  war  chest.  Theirs  the  privilege 
of  enrolling  the  secret  army  that 
will  permeate  every  rolling  mill  and 
drug  store  in  Christendom,  and  of 
dictating  the  thunder  of  diplomat 
and  war  lord  when  their  schemes 
begin  to  fail.  To  the  last  comma 
their  duties  are  defined — how  they 
will  outflank  the  Yankees  through 
neutral  territory,  eliminate  friction 
by  not  tolerating  it,  establish  them" 
selves  as  an  inevitable  collection 
agency  for  German  merchants,  and 
straddle  the  world  as  a  court  of  last 
resort  passing  upon  all  trade  dis- 
putes  under  the  sun.  ^ 


CHAPTER  TEN 

THE  EXPORT  ARMY  IN  ACTION 

The  Ubiquitous  Commercial  Division — ^The  Dictator  of  the 
World*s  Prices — In  Charge  of  the  War  Chest — ^The  Espionage 
Headquarters — ^The  Men  Behind  the  Guns — The  Supreme 
Court  of  Creation — Launching  the  Propaganda — ^The  Listening 
Post  of  Kultur — ^The  Automatic  Collection  Agency — ^The  Money 
Kings'  Campaign. 


T 


^O  THE  commercio-industrial  federation  be- 
long the  following  duties: 


Safeguarding  the  supply  of  certain  raw  materials 
which  must  be  shipped  from  foreign  countries,  or,  as 
the  case  may  be,  safeguarding  the  supply  of  their 
substitutes. 

The  creation  of  organizations  for  the  purchase  and 
distribution  of  raw  materials. 

The  creation  of  the  various  guarantee  and  com- 
pensatidn  funds  mentioned  above. 

The  rendering  of  reports  to  the  other  federa- 
tions concerning  foreign  and  domestic  facts  of  inter- 
est. 

Advisory  activity  in  commercio-political  affairs 
(commercial  treaties). 

Supporting  our  embassies  abroad  in  commercio- 
industrial  matters. 

The  diffusion  of  information  among  German  in- 
dustrial concerns. 

132 


The  Export  Army  in  Action  133 

The  settlement  of  difficulties  between  producer  and 
customer,  should  such  arise. 

Advertising  German  goods  in  foreign  countries  (by 
sample  displays  and  exhibits). 

The  compilation  of  statistics,  from  which  one  can 
find  out  the  ratios  and  amounts  of  various  exports 
in  case  embargo  measures  are  adopted. 

Making  suggestions  to  the  proper  officials  con- 
cerning embargoes  or  unrestricted  exportation. 

The  erection  of  a  permanent  information  bureau 
with  branches  in  foreign  countries. 

Making  proposals  concerning  tariff"  and  premium 
inducements. 

Mediation  between  officials  and  industrial  enter-' 
prisers. 

The  maintenance  of  German  export  products  on  a 
firm  competitive  footing  in  the  matter  of  price. 

Collaboration  on  the  trade  journal. 


To  safeguard  the  supply  of  raw  materials  which 
can  not  be  procured  within  German  territory  is 
absolutely  essential  in  maintaining  the  independence 
of  German  industry  and  at  the  same  time  in  strength- 
ening the  German  export  trade.  Difficulties  of  the 
kind  such  as  arose  temporarily  in  the  procuring 
of  raw  materials  during  the  early  days  of  the  war 
must  be  impossible  in  future.  And  the  same  is 
true  of  manipulation  of  the  prices  of  raw  materials 
which  German  industry  can  not  do  without — a  prac- 
tice that  borders  on  usury.  A  well-conducted  divi- 
sion of  raw  materials  in  connection  with  the  commer- 
cio-industrial  federation  will  form  the  best  means 
of  protection  against  occurrences  of  this  sort. 


134     The  Future  of  German  Industrial  Exports 

THE    DICTATOR   OF   THE   WORLD's    PRICES 

This  division  has  first  of  all  the  task  of  bringing 
about  production  of  these  forms  of  raw  material 
which  were  previously  obtained  from  abroad.  On 
the  basis  of  import  statistics  are  to  be  ascertained 
the  yearly  amounts  of  individual  raw  materials  used 
in  Germany.  Supplementary  statistics  which  will 
work  against  usurious  price-manipulation,  should 
show  the  prices  of  these  raw  materials  in  recent  years, 
the  dependency  of  prices  upon  the  fluctuations  of 
the  market  and  the  season  of  the  year,  and  the  in- 
fluence of  combinations  in  determining  prices.  These 
statistical  statements  give  ground  for  accurate  con- 
clusions concerning  the  dependency  of  certain 
German  industries  upon  foreign  countries  and  upon 
the  foreign  factors  influencing  the  prices  of  raw  ma- 
terials. They  make  it  possible  to  ascertain  the 
yearly  minimum  amount  of  individual  raw  materials, 
which  must  be  absolutely  guaranteed  by  the  com- 
mercio-industrial  federation.  It  is  a  matter  of  minor 
importance  whether  this  guarantee  is  carried  out 
in  the  form  of  direct  purchase  or  of  middle-dealing  or 
of  a  priority  right  of  purchase.  It  is,  however,  es- 
pecially important  to  provide  that  the  yearly  mini- 
mum amount  is  on  hand  in  Germany  at  all  times; 
in  other  words  that  the  impartial  fiUing  of  all  orders 
is  assured. 

If  the  commercio-industrial  federation  takes  care 
of  satisfying  the  entire  demand  for  raw  materials, 
speculators  will  be  eliminated  from  the  start.     In 


The  Export  Army  in  Action  135 

any  case,  at  least  in  Germany,  the  State  should 
prevent  price-manipulation  of  raw  materials  which 
are  essential  to  the  vigour  of  the  export  trade.  The 
middleman  can  not  expect  consideration  when  his 
interests  conflict  with  those  of  German  industry. 
A  central  office  for  supplying  raw  materials,  which 
aims  not  for  profit  but  for  the  strengthening  of 
industry,  will  surely  be  given  helpful  assistance  by 
the  State  through  customs-  and  freight-concessions. 
These  concessions  are  such  as  will  have  an  advan- 
tageous influence  upon  German  export  products  in 
the  matter  of  price. 

As  a  working  supply  which  must  always  he  kept  filled 
up  on  German  soil,  the  commercio-industrial  federation 
must  insist  at  least  upon  the  minimum  yearly  amounts  of 
raw  materials  that  have  to  he  ordered  from  other  countries. 

It  can  not  of  course  be  the  duty  of  the  commercio- 
industrial  federation  to  provide  each  individual 
concern  with  raw  material  directly.  To  simplify 
industrial  associations  the  necessary  gross  amounts, 
leaving  to  them  the  distribution  among  the  individ- 
ual manufacturers.  In  this  way  not  only  will  middle- 
men be  successfully  eliminated  but  embargoes  on 
manufactures  can  easily  be  carried  out  by  cutting 
off*  the  allotment  of  raw  material.  Other  problems 
to  be  solved  here  will  be: 

Coordination  of  purchase. 

The  formation  of  a  purchasing  fund  of  the  neces- 
sary amount. 

Quotas  to  be  contributed  to  the  above  by  industries 
dependent  upon  this  supply  of  raw  materials. 


136     The  Future  of  German  Industrial  Exports 

The  adjustment  of  accounts  carried  by  the  federa- 
tion with  individual  industrial  associations,  and  by 
the  latter  with  manufacturers. 

The  satisfaction  of  claims  growing  out  of  these 
accounts. 

Compensation  for  injurious  advances  in  price  by 
remitting  a  part  of  the  net  production  cost,  thus 
enabling  the  finished  articles  to  compete  in  price 
in  the  international  market — assuming  that  the 
rise  in  prices  is  caused  by  combinations  of  business 
interests  which  are  aimed,  in  the  last  analysis, 
against  Germany's  industrial  export  trade. 

The  commercio-industrial  federation  has  the  duty  of 
regulating  for  the  benefit  of  the  export  trade  the  price 
of  raw  materials y  the  height  of  which  is  dependent  upon 
the  will  of  foreign  countries. 

There  are  two  factors  which  will  aid  in  this  regula- 
tion: first,  the  above-mentioned  contributions  to  a 
purchase  fund,  for  which  of  course  all  industries  are 
to  be  called  upon  in  a  direct  or  an  indirect  way,  if 
they  profit  directly  or  indirectly  in  the  export  trade 
through  a  moderation  in  the  price  of  certain  raw 
materials;  secondly,  lessening  of  consumption.  The 
more  the  consumption  of  raw  materials  decreases, 
the  less  becomes  the  demand  for  them,  and  the 
lower  the  price  at  which  they  can  be  procured. 
Decrease  in  consumption  can  be  brought  about  fun- 
damentally by  two  means:  a  change  in  manufactur- 
ing methods,  and  the  use  of  substitute  materials. 

With  the  cooperation  of  the  individual  industrial 
associations  the  commercio-industrial  federation  can 
determine  exactly  which  forms  of  industry  are  work- 


The  Export  Army  in  Action  137 

ing  with  the  raw  material  in  question.  By  the  help 
of  the  scientific  and  the  industrial  federation  it  will 
be  possible  to  show  certain  industries  new  ways  of 
manufacture  which  enable  them  to  do  without  their 
customary  raw  material  completely  or  to  use  it  in  a 
smaller  degree.  In  this  way  it  not  only  is  left  free 
for  other  industries  but  probably  also  becomes 
cheaper  since  the  entire  consumption  of  it  decreases. 

The  more  oppressing  the  dependency  upon  foreign 
raw  material  is  found  to  be,  the  more  will  the  com- 
mercio-industrial  federation  insist  that  the  proper 
technical  (scientific  and  practical)  circles  do  their 
best  to  procure  substitute  materials  which  will 
shake  ofF  this  dependency.  In  most  cases  it  will  be 
entirely  sufiicient  to  obtain  substitutes  for  individual 
industries  alone,  because  the  entire  demand  for  the 
original  raw  material  will  thus  again  be  decreased 
and  an  effective  breach  made  in  the  dependency. 

The  commercio-industrial  federation  must  push  the 
work  of  supplanting  foreign  raw  materials  by  domestic 
substitutes, 

IN    CHARGE    OF   THE    WAR   CHEST 

Since  the  commercio-industrial  federation  is  al- 
lowed the  greatest  range  of  oversight,  it  will  be  its 
duty  to  work  out  plans  for  the  organization  and  ad- 
ministration of  the  various  compensation-  and 
guarantee-funds  mentioned  earlier,  and  to  exercise 
supreme  control  over  them.  The  commercial  statis- 
tics, which  ought  always  to  be  kept  up  to  date  by 
this  federation,  furnish  it  with  the  exact  measure  for 


138    The  Future  of  German  Industrial  Exports 

determining  the  individual  contribution  and  com- 
pensation quotas  in  question,  for  appointing  the 
times  for  payment  and  repayment  (of  which  mention 
was  made  above),  and  for  designating  the  kinds  of 
industry  which  are  to  be  called  upon  to  contribute 
to  the  funds,  or  which  are  to  be  compensated.  For 
in  the  current  statistics  of  commerce  every  wave  of 
market-fluctuation  reveals  itself  to  the  expert  in  its 
very  inception.  The  beginning  of  every  steadying  or 
weakening  in  prices  allows  itself  to  be  seen,  often 
indeed  to  be  foreseen. 

In  these  current  statistics  will  lie  the  means  of  re- 
cognizing all  the  causes  of  change  and  of  meeting  them 
eff'ectively,  or  in  other  words  of  turning  them  to  ad- 
vantage. The  commercial  statistics  are  the  most 
delicate  barometer  for  foreign  measures  friendly 
or  hostile  to  our  exports  and  for  the  strength  of  the 
effect  of  opposing  measures.  Upon  both  of  these 
kinds  of  measures  depend  all  changes  in  the  indem- 
nity and  guarantee  funds;  by  them  the  other  federa- 
tions are  influenced  in  their  activity,  and  manufac- 
turing and  economic  measures  are  evoked,  the  eff'ect 
of  which  finds  expression  again  in  these  statistics. 

The  administration  of  the  funds  provided  for  the 
protection  of  the  export  trade  is  left  to  the  commercial 
federation. 

THE    ESPIONAGE    HEADQUARTERS 

Some  of  the  many  factors  which  influence  industrial 
exports  are:  the  opening  up  of  new  finding- 
depots  for  raw  materials  in  foreign  countries;  the 


The  Export  Army  in  Action  139 

increase  in  raw-material  consumption  in  other  coun- 
tries; the  use  of  raw  materials  in  foreign  countries  for 
other  purposes  than  common  heretofore;  the  replace- 
ment of  them  abroad  by  substitutes;  the  introduction 
of  lucrative  manufacturing  methods;  the  practical 
adaptation  of  new  scientific  inventions  in  foreign 
industry;  the  imitation,  circumvention,  or  overtaking 
of  German  inventions  which  are  important  for  the 
export  trade;  the  issuing  of  special  directions  for 
supplying  and  using  goods  (directions  for  setting  up 
mechanical  appliances);  the  establishment  of  certain 
minimum  technical  standards  for  raw  materials  and 
finished  products;  regulations  concerning  packing, 
concerning  the  use  of  patterns,  concerning  changes 
in  custom  arrangements  and  results  of  competition 
in  other  branches  of  exportation,  and  the  causes  of 
those  results,  etc. 

German  industries  must,  therefore,  be  constantly 
informed  about  such  facts  as  these,  and  speed  in 
rendering  the  information  will  be  of  great  value. 
The  relationships  and  means  of  communication 
which  must  be  at  the  disposal  of  the  commercio- 
industrial  federation  in  foreign  countries  will  en- 
able it  to  make  these  observations  early  and  to 
transmit  them  to  the  interested  parties.  It  is  self- 
evident  that  for  this  purpose  the  industrial  federa- 
tion will  not  only  try  to  enter  into  official  relation- 
ships and  those  of  a  semi-official  nature,  but  that  it 
will  devote  special  care  to  making  sure  of  private  con- 
nections which  have  a  deeper  insight  into  the  special 
conditions  of  each  case.     Our  foreign   representa- 


140    The  Future  of  German  Industrial  Exports 

tives,  travellers  abroad,  the  governors  of  foreign 
branches  of  our  transportation  companies,  etc.,  will 
perform  good  service  as  sources  of  information.  It 
will  be  the  duty  of  the  commercio-industrial  federa- 
tion to  use  certain  printed  forms  so  as  to  make  the 
information  service  facile,  regular,  and  as  far  as  pos- 
sible, automatic.  It  must  collect  the  incoming  re- 
ports, and  revise  and  speedily  transmit  them  to  the 
interested  parties.  Facts  to  be  gained  from  our 
statistics  will  help  to  complete  such  reports. 

All  changes  in  conditions  abroad  which  affect  our 
industrial  exports  are  to  he  observed  by  the  commercio- 
industrial  federation  and  brought  to  the  cognizance 
of  the  interested  parties  in  a  practical  and  useful  form. 

THE    MEN    BEHIND   THE    GUNS 

By  this  activity  there  will  be  collected  in  the 
archives  of  the  commercio-industrial  federation  a 
rich  quantity  of  material  that  will  bear  upon  all 
questions  concerning  the  export  trade.  This  material 
in  many  cases  can  form  a  basis  for,  and  a  guide  in 
commercio-political  affairs.  Precautions  of  an  en- 
tirely practical  nature,  in  the  form  of  commercial 
treaties  or  amendments  to  them,  will  be  framed  upon 
the  ground  of  the  experiences  collected  by  the  com- 
mercio-industrial federation,  and  will  make  it  possi- 
ble to  assist  our  state  missions  abroad  with  advice  and 
help  in  treaty  negotiations  as  well  as  in  doubtful 
individual  cases.  We  shall  have  to  consider  whether 
it  would  not  be  advantageous  to  create  a  direct  and 
permanent  connection    between  the  federation  and 


The  Export  Army  in  Action  141 

the  commercio-industrial  representatives  of  the  state 
missions  abroad.  Both  parties,  and  the  export 
trade  particularly,  would  be  benefited  thereby.  The 
commercio-industrial  representatives  of  our  state 
missions  abroad  would  by  this  arrangement  gain  a 
very  direct  knowledge  of  the  necessities  and  wishes 
of  the  export  dealers.  These  dealers  would  be  en- 
couraged in  their  activity  by  the  consciousness  of  the 
presence  of  a  support  upon  which  they  can  always 
call  for  help.  Between  export  theories  and  export 
practice  will  be  formed  a  bridge  promising  mutual 
benefits  which  for  the  present  are  still  lacking. 
Many  export  industries  can  be  given  helpful  assist- 
ance at  the  proper  moment  by  a  gentle  and  opportune 
political  pressure  on  other  countries,  if  the  contact 
mentioned  above  between  theory  and  practice  is  per- 
manently maintained.  The  political  pressure  will  be 
felt  as  a  favour,  if  in  support  of  it  certain  advantages 
for  foreign  countries  can  be  offered,  which  will  always 
be  feasible  through  a  close  connection  between  offi- 
cials and  men  of  business. 

The  commercio-industrial  federation  should  form  a 
connecting  link  between  commercial  politics  and  prac- 
tical commerce. 

THE  SUPREME  COURT  6P  CREATION 

The  knowledge  of  all  the  conditions  of  exportation 
and  no  less  of  the  strength  of  its  own  position,  will 
enable  the  commercio-industrial  federation  to  allay 
quickly  and  decisively  controversies  arising  between 
domestic  and  foreign  producers  and  customers.     To 


142     The  Future  of  German  Industrial  Exports 

avoid  tedious  litigation  the  formation  of  a  permanent 
court  of  arbitration  for  export  affairs  will  recommend 
itself.  All  contracts  for  supplies  to  be  concluded  be- 
tween our  own  country  and  others  are  to  come  before 
the  court  of  arbitration  of  the  commercio-industrial 
federation  as  unappealable  cases.  This  court  might 
be  delegated  in  cases  of  necessity  to  the  foreign  coun- 
try in  question.  To  banish  as  quickly  as  possible 
all  points  of  friction  which  disturb  the  export  trade 
must  be  a  primary  duty  of  the  commercio-industrial 
federation.  The  foreign  customer  must  have  a  feel- 
ing of  assurance  that  in  the  court  of  arbitration  he 
will  find  absolute  protection  against  infringements  of 
his  rights;  the  domestic  manufacturer  must  know 
that  it  protects  him  against  arbitrary  vexations  from 
abroad.  In  order  to  remove  all  suspicion  of  favour- 
itismx  from  this  court,  it  will  be  well  to  include  in  it 
in  all  individual  cases  a  representative  of  the  proper 
foreign  industrial  association. 

Controversies  which  arise  in  the  export  trade  are  to 
he  settled  summarily  by  a  court  of  arbitration  which 
forms  an  integral  constituent  of  the  commercio-indus* 
trial  federation, 

LAUNCHING  THE  PROPAGANDA 

Foreign  countries  should  be  acquainted  as  quickly 
as  possible  with  the  general  make-up  and  efficiency 
of  every  new  improvement  which  finds  a  place  among 
our  exports.  Means  of  introducing  it  which  will 
here  perform  good  service,  are  the  press  propaganda 
upon  which  there  will  be  further  discussion  later,  the 


The  Export  Army  in  Action  143 

opening  of  sample  displays,  and  the  organization  of 
mobile  exhibitions. 

It  must  be  admitted  from  the  very  first  that  the 
accompHshment  of  this  task,  amid  the  probably 
very  strained  relations  which  are  to  be  expected  after 
the  conclusion  of  peace,  will  encounter  great  diffi- 
culties. These,  however,  must  not  be  permitted  to 
restrain  us  from  going  ahead  with  the  necessary  prep- 
arations in  good  time.  All  the  hatred  of  foreign 
countries  can  not  deliver  them  from  their  needs  and 
necessities.  This  fact  can  be  safely  reckoned  upon. 
The  former  foreign  customer  of  German  products 
in  his  own  interest  will  strive  as  soon  as  possible  to 
make  new  connections  which  will  restore  his  business 
to  a  prosperous  footing.  For  its  sake  he  will  tempor- 
arily forget  his  hatred  to  Germany.  First  of  all  he 
will  have  to  get  his  bearings  after  such  a  long  inter- 
ruption in  business.  It  therefore  seems  well  to  start 
sample-displays  and  mobile  trade  exhibits  for  the 
present  in  German  or  neutral  territory.  They  will 
keep  the  foreign  customer  posted,  and  later,  when 
enmity  has  sufficiently  subsided,  they  can  be  contin- 
ued abroad. 

Industrial  goods  of  the  same  or  related  kinds  ought 
to  be  united.  All  ornamentations  must  give  place 
to  actual  merit.  The  materials  and  their  make-up 
must  be  the  inducement.  Our  present  enemies  will 
probably  order  from  Germany,  for  the  time  being, 
only  such  products  as  they  can  get  in  no  other  way. 
Our  plans  must  be  based  upon  this  supposition. 
Sample  displays  and  mobile  exhibitions  are  there- 


144     ^^^  Future  of  German  Industrial  Exports 

fore,  for  the  present,  to  be  supplied  only  by  such  in- 
dustries as  can  count  with  assurance  upon  exports 
to  foreign  countries  immediately  after  the  conclusion 
of  peace.  In  order  to  transfer  interest  by  degrees 
to  other  articles  of  export,  it  will  be  advantageous 
to  include  in  these  displays  and  exhibitions  the 
products  of  related  or  auxiliary  industries,  and  in 
the  course  of  time  to  extend  advertising  slowly  in 
such  ways  as  this  until  the  moment  has  come  to 
transfer  it  directly  into  foreign  countries.  In  order 
to  avoid  difficulties  and  friction  and  not  to  burden 
our  state  missions  unnecessarily  with  intervention, 
this  advertising  ought  not  to  be  conducted  by  indi- 
viduals or  by  individual  industries  associations,  but 
by  a  body  which  has  the  recognition  of  the  govern- 
ment and  of  industry,  by  a  single  agency. 

For  this  purpose  the  commercio-industrial  federa- 
tion is  best  suited.  The  more  individual  interests 
are  eliminated  in  these  demonstrations,  and  purposes 
of  instruction  are  given  prominence,  the  more  surely 
can  success  be  anticipated.  The  opening  up  of 
commercial  connections  will  come  naturally  from  this 
advertising.  They  will  and  must  be  evoked  solely 
by  the  command  of  necessity.  The  commercio- 
industrial  federation  will  take  up  all  the  questions 
of  interested  parties,  will  pass  them  on  to  the  proper 
industrial  associations  for  solution,  and  will  transmit 
the  answers  to  the  inquirers.  In  a  similar  way,  for 
the  time  being,  orders  and  deliveries  will  be  handled 
by  this  federation  in  order,  at  first,  to  dispense  with 
personal  contact  between  former  enemies.     In  the 


The  Export  Army  in  Action  145 

course  of  time  this  contact  will  come  of  itself  to  ap- 
pear desirable  and  the  federation  will  then  be  relieved 
of  this  burden.  The  restoration  of  interrupted  com- 
mercial relationships  requires  painstaking  tact  be- 
cause at  first  one  must  reckon  with  an  emotional  at- 
titude which  unfortunately  is  incalculable.  Here  a 
disinterested  agency  does  better  service  than  indi- 
viduals who  are  looking  out  only  for  themselves  and 
not  for  the  general  welfare. 

The  commercio'industrial  federation  will  have  the 
dutjy  with  the  help  of  sample  displays  and  mobile  trade 
exhibits y  of  effecting  the  re-opening  of  commercial  rela- 
tionships with  other  countries^  and  of  making  these 
secure  in  such  a  way  that  they  can  later  be  extended  by 
the  individual  manufacturers. 

THE    LISTENING    POST   OF    KULTUR 

The  commercio-industrial  federation  will  compile 
statistics  of  the  export  trade,  independent  of  the 
government's  statistics;  the  guide  in  drawing  them 
up  will  be  their  immediate  practical  applicability. 
The  commercio-industrial  federation  will  gain  a  bet- 
ter insight  into  the  practical  business  of  industrial 
exporting  than  the  state  officials.  It  will  at  all 
times  observe  the  up  and  down  movements  of  export 
quantities  in  detail  and  will  more  quickly  comprehend 
and  recognize  the  inclinations  of  foreign  customers 
and  therefore  will  be  soonest  in  the  position  to  dis- 
cover means  for  throttling  dangerous  influences  at 
their  very  beginning.  The  application  of  these  means 
is  the  business  of  the  state  authorities,  and  to  the 


146^  Tlu  Future  of  German  Industrial  Exports 

latter  the  commercio-industrial  federation  should 
present  suitable  proposals  concerning  the  nature, 
extent,  and  duration  of  these  means.  Since,  again, 
their  eflFect  will  be  recognized  first  by  this  federation 
it  is  possible  for  it  to  suggest  to  the  state  authorities 
the  instant  at  which  measures  in  operation  are  to  be 
annulled. 

The  commercio-industrial  federation  is  to  serve  as 
a  feeler  for  the  state  authorities  when  it  comes  to  adopt- 
ing measures  to  boost  the  export  trade. 

As  organs  of  this  ^'feelers-activity  will  be  used  the 
branches  of  the  commercio-industrial  federation  en- 
gaged in  work  abroad.  The  latter  might  at  the  start 
be  loosely  associated  with  the  commercial  staff  of  the 
state  missions  abroad.  They  could  be  separated 
and  made  independent  representatives,  as  the  healing 
of  mutual  relationships  takes  place.  These  repre- 
sentatives will  of  course  remain  permanently  in 
touch  with  the  missions,  as  has  already  been  indi- 
cated, and  will  serve  them  in  the  same  way  as  *',feel- 
ers"  and  sources  of  information,  just  as  the  federa- 
tion does  for  the  proper  government  officials  at  home. 
These  branches  also  institute  and  direct  the  courts  of 
arbitration,  engaged  abroad.  They  form  the  offices 
of  the  federation  for  collecting  information  and  the 
executive  organs  for  its  directions.  Similarly  they 
serve  as  bureaus  of  information  for  our  citizens  and 
foreigners — for  the  latter  directly,  for  the  former 
indirectly — ^through  the  federation  to  which  they  are 
subject.  They  furnish  mediation  and  support  in 
trade  between  German  concerns  and  their  customers 


The  Export  Army  in  Action  147 

abroad;  they  give  instruction  concerning  customs  and 
tariff  conditions  and  price  movements.  In  a  word 
they  are  pioneers  who  have  to  reopen  the  commercial 
highways  destroyed  by  the  war.  They  will  furnish 
to  the  federation  periodic  reports  concerning  commer- 
cial conditions  and  the  factors  influencing  these  in 
the  countries  in  question.  Such  reports  are  to  be 
published  in  the  general  trade  journal. 

The  re  establishment  and  maintenance  of  commercial 
relationships  will  he  advantageously  cared  for  hy  branch 
establishments  of  the  commercio^industrial  federation 
which  should  he  permanently  located  abroad. 

THE    AUTOMATIC   COLLECTION   AGENCY 

The  mercantile  federation  will  have  the  primary 
duty  of  adapting  former  business  usages  to  the  cir- 
cumstances changed  by  the  war.  In  particular  the 
modes  of  accounting,  of  invoicing  goods,  and  of 
payment  must  be  subjected  to  a  thorough-going 
renovation.  The  experiences  which  have  been  gained 
wiA  outstanding  accounts  in  hostile  countries  warn 
us  to  be  on  our  guard,  and  to  make  a  change  in  mer- 
cantile business  practice  in  order  to  prevent  similar 
very  detrimental  occurrences  in  all  the  time  to  come. 

The  most  flourishing  export  trade  becomes  worth- 
less if  collections  are  even  in  the  least  endangered. 
We  should  look  into  the  question  as  to  whether  it 
might  not  be  advisable  for  the  sake  of  precaution  to 
institute  a  Central  Clearing  House  which  will  make  it 
possible  to  cancel  on  the  books  the  total  amounts 
due  on  exports  and  on  imports  in  such  a  way  that  the 


148     The  Future  of  German  Industrial  Exports 

money  payments  in  either  direction  reach  only  the 
remainder.  In  terms  of  business  practice,  this  means : 
The  claims  of  foreign  shippers  upon  German  custom- 
ers will  be  settled  by  the  obligations  of  foreign  cus- 
tomers to  German  shippers  being  indorsed  directly 
over  to  the  Central  Clearing  House.  Unpaid  ac- 
counts due  us  from  foreign  countries  will  in  this  way 
always  be  small.  The  danger  of  loss  from  a  fall  in 
the  rate  of  exchange  is  lessened.  The  security  of 
collections  is  increased.  The  German  exporter  is 
protected  since  the  payment  office  is  a  German  one. 
He  will  be  saved  losses  of  interest  if  foreign  claims 
upon  us  and  obligations  to  us  are  at  an  equilibrium, 
and  accordingly  can  be  balanced  off  immediately  by 
the  Central  Clearing  House  in  the  foreign  country. 
Payment  is  provided  for,  since  the  importer  settles 
with  the  Central  Clearing  House.  The  mercantile 
federation  will  erect  branches  abroad  for  this  purpose 
which  will  be  housed  in  the  same  quarters  with  the 
branches  of  the  other  federations  to  make  intercom- 
munication easy. 

A  problem  of  the  mercantile  federation  will  consist 
in  guaranteeing  and  lessening  outstanding  accounts 
due  us  from  foreign  countries.  It  will  he  solved  hy 
cancelling^  as  far  as  possibky  the  claims  of  other  coun- 
tries upon  us  by  their  obligations  to  us.  That  will  he 
done  in  the  foreign  land  itself  by  clearance^  or^  in 
other  wordsy  hy  endorsing  over  the  bills  of  exchange. 

A  more  detailed  description  here  of  payment 
methods  would  lead  us  too  far.  The  balancing  can 
be  done  directly  with  the  help  of  the  financial  federa- 


The  Export  Army  in  Action  149 

tion,  or  indirectly  by  foreign  customers  handing 
over  to  foreign  shippers  their  obHgations  to  pay — 
(bills  of  exchange  and  so  forth).  Since  the  value  of 
such  commercial  paper  depends  upon  the  credit  of 
the  maker,  it  will  be  necessary  for  the  mercantile 
federation  to  establish  an  information  office  which 
will  be  free  from  the  shady  features  of  private  in- 
formation offices  to-day.  The  mercantile  federation 
is  to  protect  the  German  exporter  from  loss  by  placing 
at  his  disposal  truthful  reports  concerning  the  sol- 
vency of  foreign  customers.  For  its  own  protection, 
the  federation  will  stipulate  that  it  only  guarantees 
the  collection  of  claims  upon  foreign  customers  when 
the  solvency  of  the  customer  was  confirmed  by  it 
before  the  conclusion  of  the  transaction. 

In  order  to  bring  in  a  little  money  so  as  to  balance 
its  books,  the  federation  by  a  reverse  process  will 
furnish  to  the  foreign  shipper  equally  faithful  reports 
concerning  the  solvency  of  German  importers,  and 
In  that  way  will  gain  the  confidence  of  the  foreign 
business  world.  At  the  same  time,  it  will  also  make 
personal  contact  largely  superfluous — a  valuable 
service  in  view  of  the  feelings  which  must  be  expected. 
Absolute  and  fully  warranted  confidence  must  take 
the  place  of  the  warmer  emotions  that  can  scarcely 
be  looked  for  in  the  years  immediately  ahead.  The 
mercantile  federation  will  form  the  path  by  which 
such  confidence  can  come. 

The  mercantile  federation  will  serve  as  an  informal 
tion  office  for  the  solvency  of  the  business  world  con" 
nected  with  the  export  trade. 


150     The  Future  of  German  Industrial  Exports 

In  conjunction  with  the  associations  of  German 
merchants,  the  mercantile  federation  will  work  out 
business  standards  which  are  adapted  to  the  new 
conditions  and  the  various  branches  of  commerce, 
and  which  are  to  be  observed  in  business  deaUngs 
with  foreign  countries. 

Some  lesser  duties  of  the  mercantile  federation  will 
be:  representing  German  firms  for  the  time  being  in 
business  abroad;  recommending  foreigners  for  em- 
ployment as  agents;  submitting  reports  of  foreign 
markets;  representing  German  firms  before  foreign 
officials  in  business  litigation;  maintaining  a  legal 
bureau  with  a  staff  of  lawyers  and  business  men  for 
work  on  foreign  cases;  collaborating  on  the  general 
trade  journal. 

THE   MONEY   KINGS*   CAMPAIGN 

The  financial  federation,  which  likewise  will  em- 
ploy foreign  branches  in  its  work,  should  be  assigned 
the  following  duties  of  first  importance: 

Transactions  in  actual  money  as  directed  by  the 
mercantile  federation. 

Collection  of  money  from,  and  payment  of  money 
to,  parties  concerned  with  the  compensation-  and 
guarantee-funds,  and  entitled  to  support  from  them. 

Administration  of  these  funds. 

Collection  and  disbursing  of  royalties  for  the  use  of 
inventions,  according  to  earlier  explanations. 
^  Entire  financial  administration  of  all  the  federa- 
tions. 

Creation  and  support  of  a  special  industry  fund 


The  Export  Army  in  Action  151 

which  is  to  be  used  for  temporarily  reinforcing  weak- 
ened industries,  in  the  interest  of  the  export  trade. 

Financial  control  of  the  associations  for  raw  ma- 
terial. 

Prevention  of  the  exploitation  of  financially  weak 
industries  by  grasping  capitalists. 

Finally,  a  share  in  supervising  the  influence  whick 
foreign  capital  exercises  over  important  protective 
industries,  or  strives  for. 

It  is  readily  to  be  supposed  that  the  financial 
federation  will  perhaps  expand  by  degrees  into  a 
bank  for  the  manufacturing  export  trade,  and  that 
in  it  lie  the  possibilities  of  a  German  Export  Bank 
on  a  grand  scale,  which  will  represent  not  the  special 
interests  of  one  industry,  but  the  general  interests 
of  all  German  industries.  Since  this  bank  can  find 
a  sound  basis  only  in  the  mutual  interest  of  all  in- 
dustries, it  will  be  able  to  offer  special  advantages 
and  security  to  all  manufacturers  who  are  concerned 
in  the  export  trade.  Its  relation  to  banks  already 
in  existence  is  made  clear  by  these  considerations. 

To  the  financial  federation  falls  the  duty  of  controlling 
all  financial  operations  which  are  necessary  for  increas- 
ing industrial  exports;  it  forms  a  foundation  for  th^ 
general  German  export  bank  of  the  future. 


PRECEDING  the  Export  War, 
the  German  plan  contem- 
plates laying  a  monumental 
foundation  for  the  siege  guns  of 
commerce  with  the  peace  treaties. 
Blandly  stating  that  they  will  be 
dictated  in  Potsdam  and  [written 
in  blood,  they  have  tabulated  their 
*^ minimum  demands.''  These  will 
impose  upon  the  United  States  and 
all  creation  the  conditions  that  the 
Prussians  may  select  their  own 
properties  in  our  country  and 
operate  them  under  Imperial  jur- 
isdiction; that  their  officials  be 
stationed  in  Allied  territory  to 
punish  anyone  refusing  to  buy  their 
goods;  that  we  give  bond^ guaran- 
teeing their  enforced  investments 
and  accounts,  and  that  we  purchase 
from  them  exactly  the  amount  of 
all  their  exports  which  they  shall 
command.  And  they  add  that  they 
will  '^consider  whether  it  is  not  well 
to  demand  exclusive  favouritism  of 
Germany  in  this  point  or  that,  or 
in  air'! 


CHAPTER   ELEVEN 

A    STUDY   IN   SCARLET.    THE    PROPOSED 
TREATIES 

Blood  and  Bombast — ^The  Kaiser's  "Minimum  Demands" — 
The  Exclusive  Favouritism  of  Germany — Unlimited  Right  to 
Take  Allied  Materials — German  Supervision  in  Allied  Countries 
— Control  of  the  Allied  Freight  Rates — Punishment  of  Hostile 
Boycotters — Restoring  the  "Stolen"  Patents — ^Allied  Guarantees 
Against  "Insufferable  Discrimination" — A  Warm  Welcome  For 
the  "Federation." 

7.  Commercial  Treaties 

INTELLIGENCE,  hard  work,  and  organization 
have  raised  Germany's  trade  to  an  elevation 
which  was  followed  by  her  enemies  with  increasing 
envy,  and  at  last  with  alarm.  All  means  admissible 
in  peace  were  brought  into  play  to  stop  this  upward 
sweep.  Through  German  resourcefulness  and  Ger- 
man initiative  they  came  to  naught.  German 
technical  skill  emerged  in  all  respects  victorious. 
Every  new  obstacle,  in  the  form  of  commercial 
treaties  and  their  supplements,  which  was  set  up 
abroad  against  its  victorious  progress  was  overcome 
and  banished  by  the  increased  and  successful  appli- 
cation of  mental  power.  When  all  efforts  at  re- 
pression, in  the  form  of  commercial  treaties,  had 

154 


A  Study  in  Scarlet  1 55 

shown  themselves  vain,  they  seized  the  sword  and 
cleft  the  commercial  treaties,  purposing  to  dictate, 
in  blood,  new  ones  which  should  sever  the  vital 
sinews  of  German  exportation.  It  has  turned  out  a 
bit  different  from  what  the  shrewdest  of  the  shrewd 
had  planned.  In  one  point  they  were  right.  The 
future  commercial  treaties  will  be  written  in  blood. 
German  might  and  German  justice  will  stamp  and 
seal  them. 

THE    kaiser's    "minimum   DEMANDS" 

The  fate  and  fortune  of  our  industrial  exports 
hang  upon  the  coming  trade  agreements.  These 
will  show  very  plainly  whether  German  industry 
has  learned  the  lessons  of  the  war  and  the  years 
preceding.  The  experiences  then  gained  show,  as 
has  already  been  pointed  out,  that  international 
treaties  are  only  partially  reliable.  To  reckon  in 
future  upon  the  security  of  treaties,  to  build  upon 
loyal  observance  of  them,  would  be  more  than  im- 
provident. Security,  as  before,  must  lie  in  the 
power  of  German  industry.  The  commercial  treaty 
in  the  immediate  future  must  be  looked  upon  only 
as  an  attempt  to  define,  as  exactly  as  may  be,  the 
possibilities  and  opportunities  within  the  reach  of 
exportation — as  a  standard  for  deciding  upon  means 
of  transit  through,  and  trade  with  countries,  or  as  a 
category  for  all  obstructions  to  development  which 
are  not  set  up  officially  by  foreign  countries  against 
the  German  export  trade.  He  who  sees  more  in  it 
for  the  present,  sees  too  much. 


156    The  Future  oj  German  Industrial  Exports 

The  foregoing  discussion  contains  in  principle  all 
that  we  must  demand  of  the  future  commercial 
treaties  in  the  interest  of  our  industrial  exports, 
namely: 

Assurance  of  a  supply  of  indispensable  raw  ma- 
terials at  reasonable  prices,  not  jacked  up  by  either 
the  country  consigning  the  goods  or  transporting 
them  across  its  territories. 

Prevention  of  import  or  transit  duties  which 
would  be  oppressive  to  our  exports. 

Prevention  of  tariffs  which  are  onerous  in  com- 
parison with  those  charged  other  countries. 

Inadmissibility  of  foreign  export-premiums  which 
are  injurious  to  Germany's  export  trade. 

Obligation  on  the  part  of  the  foreign  country  to 
suppress  every  boycott  movement  against  German 
products. 

Assurance  of  the  inviolability  of  German  intellec- 
tual property  and  of  German  trade-marks  with  a 
retroactive  guarantee,  extending  back  to  the  time 
of  the  origin  of  the  property  right. 

Admittance  of  German  competitors  to  official 
competitions  and  to  the  bidding  for  government 
contracts,  when  other  foreign  competitors  are 
admitted. 

Assurance  of  fair  contract  awards  when  German 
bids  are  superior  in  specifications  and  price  to  others. 

Granting  of  all  concessions  to  German  manufac- 
turers which  are  given  to  other  foreign  concerns. 

Protection  of  German  branches  and  representa- 
tives abroad  in  equal  measure  with  that  assured  to 
other  foreign  countries. 

Official  recognition  of  the  five  federations  named 
above,  and  their  branches  abroad. 

Terms  governing  compensations  and  embargoes. 


A  Study  in  Scarlet  157 

Full  equality  for  German  undertakings  and 
capital  engaged  abroad,  in  comparison  with  those  of 
other  foreign  countries,  respecting  taxation  and 
other  levies. 

Inadmissibility  of  any  sort  of  favouritism  of  citizens 
of  former  allies,  so  far  as  the  German  export  trade 
could  be  injured  in  this  way. 

Security  of  capital  invested  abroad,  and  of  out- 
standing accounts  due  us. 

THE    EXCLUSIVE    FAVOURITISM   OF   GERMANY 

It  must  be  emphasized  that  the  above  are  only  a 
selected  few  from  among  the  points  which  suggest 
themselves  in  this  connection,  and  that  they  repre- 
sent minimum  demands.  The  representatives  en- 
trusted with  working  out  the  foundations  of  future 
commercial  treaties  will  certainly  consider  whether  it 
would  not  be  well  to  demand  exclusive  favouritism 
of  Germany  in  this  point  or  that,  or  in  all,  considering 
the  levity  with  which  this  bloody  war  was  forced 
upon  Germany,  and  the  sacrifices  she  has  had  to 
make. 

UNLIMITED    RIGHT   TO    TAKE    ALLIED    MATERIALS 

If  the  raw-materials  division  of  the  commercio- 
industrial  federation  wishes,  as  was  explained  earlier, 
to  remove  all  uncertainty  about  the  supply  of  raw 
materials  which  have  to  be  ordered  from  abroad,  it 
must  be  sure  that  the  foreign  states  it  relies  upon  do 
not  place  in  its  way  obstacles  of  any  sort  which 
might  bring  with  them  injurious  advances  in  price. 
Before  all  else  a  restriction  in  quantity  must  be  out 


158    The  Future  of  German  Industrial  Exports 

of  the  question.  That  will  be  attempted  in  the  case 
of  raw  materials  for  the  protective  industries.  Hav- 
ing provided  against  this  danger,  it  must  stipulate 
also  an  unlimited  opportunity  to  acquire  the  sites 
needed  for  winning  of  raw  materials  and  an  unlimited 
right  to  get  them  out  by  German  enterprises.  It 
must  preclude  any  further  restriction  by  providing 
that  these  enterprises  can  not  be  bound  to  sell  any 
amounts  of  these  raw  materials  in  the  country  where 
they  have  gained  them,  not  to  use  them  there  in 
manufacture  or  any  other  way.  The  government 
of  the  country  in  question  can  be  permitted  to  exer- 
cise its  right  of  requisitioning  them  only  with  the 
consent  of  the  proper  German  officials.  To  guaran- 
tee the  fulfilment  of  these  demands  certain  pledges 
must  be  given. 

The  commercial  treaty  must  assure  an  opportunity  to 
procure  unrestricted  quantities  of  raw  materials  in 
foreign  countries^  and  to  export  them  without  restriction^ 
to  German  territory, 

GERMAN    SUPERVISION   IN   ALLIED   COUNTRIES 

The  German  export  trade  in  the  interest  of  its 
efiiciency  must  be  able  to  reckon  upon  full  uniformity 
in  certain  respects,  with  the  limits  suggested  below. 
The  raw  materials  which  its  protective  industries 
need  must  always  be  on  hand  in  sufficient  quantities. 
Just  as,  on  the  one  hand,  it  is  inadmissible  to  exploit 
natural  resources  uneconomically  for  capitalistic 
interests,  so  on  the  other  hand,  the  amount  of  raw 
materials  turned  out  can  never  be  permitted  to  be 


A  Study  in  Scarlet  159 

decreased  artificially  because  of  a  selfish  desire  to 
charge  a  higher  price,  nor  can  their  quality  be  re- 
duced. Hostile  countries  have  no  interest  in  oppos- 
ing such  pernicious  practices,  which  would  hurt  only 
our  export  trade.  It  is,  on  the  contrary,  to  be 
expected  that  they  will  secretly  encourage  thenio 
Therefore  it  must  be  made  possible  for  the  German 
government  to  interfere  without  foreign  countries 
protesting  that  their  sovereignty  is  violated.  The 
possibility  or  probability  of  friction  over  this  point 
must  be  removed  beforehand  through  the  commercial 
treaty,  by  granting  to  the  proper  German  authorities 
the  same  rights  over  German  concerns  abroad  as 
they  have  over  domestic  business.  Since  these 
rights  are  largely  of  an  industrial  nature,  no  opposi- 
tion can  very  well  be  made  to  their  establishment  by 
treaty. 

Germany  must  have  the  right  of  supervision  over 
German  plants  abroad  for  supplying  raw  materials 
to  her  protective  industries,  at  least  in  reference  to  their 
operating  processes  and  the  nature  of  their  work. 

CONTROL   OF   THE   ALLIED   FREIGHT   RATES 

It  will  not  alone  suffice  to  demand  unlimited  oppor- 
tunities to  secure  raw  materials  in  foreign  countries 
for  our  protective  industries,  for,  by  the  time  they 
reach  Germany,  their  prices  may  have  been  raised 
to  inadmissible  amounts  by  export-  or  transit- 
charges,  freight  rates,  the  refusal  of  export  premiums 
which  are  granted  to  other  foreign  businesses  of  sim- 
ilar kind,  and  by  other  petty  forms  of  chicanery,  the 


i6o     The  Future  of  German  Industrial  Exports 

consequences  of  which  are  oppressive;  (for  instance, 
a  refusal  to  build  connecting  railways,  or  to  recognize 
the  expropriation  rights  of  German  enterprises,  etc.) 
The  commercial  treaty  must  place  an  absolute  bar 
to  such  arbitrary  advances  in  the  final  prices  of  raw 
materials,  which  would  render  dijfEcult  the  work  of 
German  industry  and  would  put  the  export  trade 
under  a  disadvantage  in  the  prices  it  could  charge. 
That  treaty  must  likewise  be  a  bar  to  any  discpm- 
ination  in  favour  of  other  foreign  industries  when 
concessions  are  being  granted.  The  retaliatory 
measures  to  be  applied  in  case  of  infringement  must 
be  determined  upon  beforehand  with  all  severity,  in 
order  that  every  attempt  of  foreign  powers  in  such 
directions  may  be  nipped  in  the  bud,  for  reprisals 
are  only  successful  when  their  effect  is  keenly  felt. 

The  commercial  treaty  must  make  it  impossible  be- 
forehand to  damage  German  business  in  raw  materials 
abroad  by  manipulating  prices. 

PUNISHMENT   OF    BOYCOTTERS 

In  recent  years  boycotts  have  been  frequently 
enforced  against  foreign  articles  and  businesses  under 
the  cloak  of  nationalism,  while  governments  silently 
encouraged  or  acquiesced  in  them.  Fear  of  retaliatory 
measures  will  prevent  states  hostile  to  our  exporta- 
tion from  officially  or  even  secretly  supporting  boy- 
cott movements  of  this  kind,  which  are  one  of  the 
factors  with  which  the  German  manufacturing  ex- 
port trade  must  surely  reckon  in  the  immediate  years 
to  come.     We  can  not,  however,  be  satisfied  with  a 


A  Study  in  Scarlet  i6j 

merely  passive  attitude  on  the  part  of  foreign  gov- 
ernments, for  it  does  more  damage  than  can  be  per- 
mitted. Provision  must  be  made  in  advance  that 
foreign  officials  employ  all  the  force  at  their  com- 
mand against  the  originators,  promoters,  and  parti- 
cipants in  boycotting  movements  which  injure  our 
export  trade,  and  that  in  such  cases  the  German  gov- 
ernment have  the  right  to  be  consulted,  and  to  share 
in  deciding  the  measures  of  opposition. 

We  can  imagine  a  case  where  sabotage,  silently 
acquiesced  in  on  the  part  of  officials,  is  carried  on  in 
those  industries  which  serve  to  procure  raw  materials 
abroad  for  German  protective  industries.  Again,  we 
can  imagine  a  case  where,  under  the  harmless  fiction 
of  collecting  statistics,  German  goods  are  labelled 
by  the  officials  so  that  their  German  origin  may  be 
particularly  noticeable,  and  boycotts  or  other  injury 
may  thus  be  incited.  We  can  imagine  a  case  where 
the  same  or  similar  products  of  non-German  origin 
are  given  the  right,  or  are  silently  permitted  to  choose 
distinguishing  marks  which  especially  emphasize  their 
non-German  origin.  We  can  imagine  a  case  where, 
under  an  apparently  harmless  pretext,  non-German 
products  are  granted  financial  concessions  (subsidies, 
import  premiums,  etc.),  for  the  purpose  of  destroying 
the  competitive  abihty,  in  the  matter  of  price,  of 
products  coming  from  Germany.  The  simplest 
German  measures  of  retaliation  would  consist  in 
granting  products  threatened  in  this  way  export 
premiums  that  are  enough  to  make  up  the  difference. 
This  means  is  not  to  be  recommended,  out  of  regard 


l62      The  Future  of  German  Industrial  Exports 

for  the  state  finances;  rather  it  must  be  stipulated  by- 
treaty  that  all  foreign  concessions  which  could  in- 
fluence prices  must  be  granted  without  exception  to 
German  products  also. 

The  commercial  treaty  must  provide  for  protective 
measures  against  boycotts  of  German  products  and 
whatever  would  put  them  under  a  disadvantage  in  price. 

RESTORING   THE    " STOLEN ''    PATENTS 

A  Striking  proof  of  the  kind  of  motives  behind  this 
bloody  war  is  the  action  taken  by  hostile  countries 
with  reference  to  patent  rights — declaring  the  crea- 
tions of  German  intellect  and  German  science  prop- 
erty without  an  owner.  Since  they  could  not  reach 
the  heights  of  German  creative  ability,  thievery  of 
intellectual  property  was  sanctioned  by  law.  The 
remedy  was  extremely  simple  and  worthy  of  Ger- 
many's enemies.  The  results  of  a  half  century  of 
intensive  intellectual  activity  became  free  robber- 
booty.  This  spoliation,  nevertheless,  had  its  good 
side,  for  under  its  pressure,  as  German  patent  litera- 
ture shows,  undreamed-of  improvements  and  inven- 
tions were  brought  forth,  and  numerous  important 
industrial  innovations  are  in  preparation.  The  fu- 
ture commercial  treaty  will  not  only  see  to  it  that 
the  stolen  rights  of  ownership  are  restored  to  their 
former  owners  unimpaired,  that  full  compensation 
is  made  for  the  financial  loss  incurred  up  to  the  time 
when  the  property  is  restored,  and  that  a  priority 
right  in  hostile  countries  is  assured  to  the  German 
patents  awarded  during  the  war;  but  the  treaty  must 


A  Study  in  Scarlet  163 

also  make  certain  that  special  statutory  measures 
make  occurrences  of  this  sort  impossible  in  future. 
Similar  precautions  are  to  be  taken  in  the  interest  of 
German  trade-marks. 

The  commercial  treaty  must  safeguard  the  intellectual 
property  rights  of  German  industries  in  greater  measure 
than  previously^  the  guarantee  to  extend  backward  to 
the  time  of  their  origin, 

ALLIED    GUARANTEES    AGAINST    '*  INSUFFERABLE    DIS- 
CRIMINATION" 

The  uninterrupted  maintenance  of  German  indus- 
try during  the  war,  the  activity  of  which  in  certain 
respects  actually  shows  an  advance  over  the  times  of 
peace,  is  for  Germany's  enemies  an  extremely  un- 
pleasant surprise.  However,  in  spite  of  the  hostile 
attitude  of  her  enemies,  it  assures  her  the  probability 
that,  in  indispensable  products,  her  industry  will  be 
patronized  abroad  on  account  of  its  intactness  and 
efficiency,  but  only  in  cases  where  other  producers 
can  not  be  found  who  can  deliver  the  same  goods 
within  the  same  time.  In  other  cases  it  must  be 
expected  that  German  technical  skill  will  be  excluded 
from  supplying  our  present  enemies.  Such  a  condi- 
tion as  this  would  be  insufferable.  It  must  be  pre- 
vented from  arising.  The  commercial  treaty  must 
stipulate  that  German  shippers  be  eligible  wherever 
foreign  material  and  foreign  workmanship  are  patron- 
ized at  all.  It  must  be  absolutely  impossible  for 
manufacturers  from  countries  now  allied  against 
Germany  to  enjoy,  under  any  form  or  pretext  what- 


164    The  Future  of  German  Industrial  Exports 

soever,  a  preference  in  competing  for  state  work. 
Protection  must  go  so  far  that  domestic  manufactur- 
ers of  the  country  in  question  who  order  foreign  ma- 
terial are  not  permitted  to  exclude  German  articles. 

But  no  confidence  can  be  placed  in  paper  conces- 
sions alone.  On  the  basis  of  statistical  data,  we 
must  specify  the  proportion  in  which  German  prod- 
ucts have  to  be  included  in  official  consignments 
from  foreign  countries,  no  matter  whether  the  deliv- 
ery be  made  directly,  or  through  the  medium  of  a 
domestic  dealer.  Purchases  according  to  this  pro- 
portion must  be  guaranteed  by  the  state  which  is 
a  party  to  the  treaty.  The  objection  will  then  be 
made  that  such  a  demand  is  an  attempted  intrusion 
upon  the  sovereignty  of  the  state.  The  patience  of 
Germany  before  the  war  was  stretched  farther  than 
was  really  well;  it  was  exercised  only  to  keep  the 
peace.  We  have  gained  nothing  by  generously 
yielding  a  point  time  after  time,  instead  of  insisting 
upon  our  rights. 

"Equal  justice  for  all!"  must  here  also  be  the 
watchword.  But  because  justice  is  a  term  which 
can  be  all  too  easily  bent  to  suit  one's  purposes,  as 
the  most  recent  past  teaches,  it  must  be  made  a 
matter  of  figures  and  put  down  in  black  and  white. 
The  duty  of  the  guarantors  will  be  to  see  to  it  that 
the  pledged  security  goes  unforfeited  because  the 
guarantee  is  fulfilled.  After  the  war  also,  the  Ger- 
man export  trade  must  insist  upon  finding  among  its 
present  enemies  the  market  which  belongs  to  it,  ac- 
cording to  the  rights  of  the  past,  and  the  degree  of  its 


A  Study  in  Scarlet  165 

efficiency.  It  must  insist  that  it  be  not  discrimin- 
ated against  in  favour  of  other  foreign  competitors, 
that  at  least  its  former  percentage  share  in  the  world 
market  be  guaranteed,  and  that  this  share  shall  be 
enlarged  in  future  in  proportion  to  the  increase  in  the 
capabilities  of  German  industry.  As  an  integral 
constituent  of  the  commercial  treaty  there  must  be 
an  import  guarantee  given  by  the  foreign  power  in 
figures  for  each  individual  kind  of  German  industry 
(the  figure  understood  as  the  percentage  of  German 
goods  to  all  other  imported  goods  of  the  same  in- 
dustry). 

The  commercial  treaty  must  demand  state  guarantees 
that  German  goods  be  accorded  as  wide  a  range  of  sale 
as  is  justified  by  statistics  and  by  the  increasing  effici- 
ency of  German  industry. 

A   WARM   WELCOME    FOR   THE    "  FEDERATION '* 

Without  regard  to  the  range  of  the  officially  guar- 
anteed market,  warrants  must  be  given  that  the 
private  sales  of  our  industrial  exports  be  not  re- 
stricted. Such  a  restriction  can  be  avoided  if  Ger- 
man branches  and  representatives  are  not  subject  to 
any  sort  of  exceptions,  and  if  the  freedom  of  move- 
ment guaranteed  to  all  other  foreign  representatives 
and  branches  holds  good  for  them  also. 

It  is  not  necessary  here  to  demand  special  prefer- 
ments and  concessions;  equality  in  qualification  is 
entirely  sufficient.  If  it  be  granted,  German  dili- 
gence and  German  efficiency  will  take  care  that  our 
industrial  exports  come  to  their  rights  in  private 


l66    The  Future  of  German  Industrial  Exports 

trade  also.  But  there  must  be  an  open  door!  If 
this  demand  is  incontestably  essential  in  the  case  of 
foreign  branches  of  private  industries,  it  must  hold 
good  in  a  still  greater  degree  for  the  official  represen- 
tatives of  Germany's  technical  industry,  embodied 
in  the  five  federations  mentioned  above,  and  in  their 
foreign  branches.  The  special  protection  itself 
which  is  to  be  granted  to  them  brings  great  advan- 
^  tage  to  the  foreign  country  in  question,  because  they 
represent  instrumentalities  of  mediation  in  the  best 
(moral)  sense  of  the  word,  because  they  render  effec- 
tive service  to  Germany's  export  trade  only  when 
they  provide  for  a  smooth  settlement  of  all  business 
affairs  between  domestic  and  foreign  buyers  and  sell- 
ers, and  because  that  country  after  all  will  be  the 
gainer  from  such  smoothly  running  business.  It 
must  also  be  demanded  that  these  federations,  since 
they  themselves  aim  at  and  can  gain  no  profit,  remain 
free  of  taxes  in  foreign  countries. 

German  branch-establishments  and  representatives 
in  foreign  countries  must  not  be  burdened  by  being 
singled  out  for  special  rulings  and  obligations. 

To  be  always  demanding  and  never  giving  in  re- 
turn is  repugnant  to  German  nature.  It  goes  with- 
out saying  that  concessions  representing  valuable 
compensations  will  be  granted  to  foreign  countries 
which  again  renew  unobjectionable  commercial  rela- 
tions by  treaty.  In  the  interest  of  our  own  industrial 
exports  we  will  not  limit  ourselves  to  granting  certain 
customs-  and  tariff-reductions;  we  will  go  further 
and  grant  import  premiums  to  certain  foreign  prod- 


A  ^tudy  in  Scarlet  167 

ucts  and  manufactures,  if  the  trade  in  them  is  suited 
indirectly  to  promote  our  export  trade.  These  con- 
cessions are  to  be  defined  by  treaty,  just  as  the  am- 
bargo  rights. 

The  lessons  of  the  most  recent  past  make  it  neces- 
sary to  demand  a  special  guarantee  (with  specific 
figures)  for  all  capital  invested  in  foreign  countries, 
and  all  outstanding  accounts,  the  guarantee  being 
retroactive  to  cover  amounts  already  existing. 

The  liability  of  foreign  countries  for  German  capital 
employed  in  them  is  to  he  carefully  defined  hy  the  com-^ 
mercial  treaty. 

Every  import  concession  granted  hy  foreign  countries 
must  be  effective  for  exports  from  Germany  also. 


To  NEUTRALIZE  hostility 
and  allay  the  suspicions 
of  allied  customers,  the 
advance  guard  of  the  German 
invasion  will  offer  for  sale  only 
' 'Dena tionalized  goods ."  They 
will  appear  to  be  ^'anonymous'* 
— cosmopolitan.  To  maintain 
this  disguise,  the  Teutons  cfe- 
cree  that  everyone  else  shall 
keep  their  goods  also  free  from 
mark  or  sign.  Advertisements 
and  shipments  of  these  prod" 
ucts  incognito  will  appear  to 
come  from  neutral  countries, 
and  will  be  spirited  into  our 
homes  and  our  stores  by  clever 
actors  sedulously  made  up  to 
resemble  our  harmless  neigh^ 
bours.  Even  their  correspond 
dence,  mimeographed  in  Berlin 
in  Bostonian  English  will  bear 
a  neutral  post  mark  and  an 
impartial  signature. 


CHAPTER   TWELVE 

THE  DENATIONALIZATION   DODGE.       AN 
ANTIDOTE  TO  HATRED 

Commerce  Incognito — ^The  Stratagem  of  Deceit — Outwitting 
the  Allied  Buyers — ^A  Severe  Lesson  in  Customs  Procedure — 
Propaganda  Under  Cover — A  Flank  Movement  Through 
Neutral  Ground. 

8,    Ways  of  Denationalizing  German  Goods 

GERMAN  exporters  must  expect  that,  for  a 
long  time  after  the  end  of  the  war,  German 
manufacturers  will  be  outlawed  among  our 
present  enemies.  It  would  be  idle  to  live  in  the  opin- 
ion that  peace  will  banish  hatred  at  once.  The  latter 
must  be  reckoned  with  the  German  industry  also. 
It  will  be  well,  therefore,  to  meet  people  half  way, 
avoiding  everything  that  might  provoke  national 
passions  which  are  not  yet  lulled  to  rest.  Victory  in 
this  conflict  will  be  harder  than  with  the  sword,  for 
the  weapons  to  be  wielded  here  are  patience,  forbear- 
ance, and  often  also  the  denial  of  the  individual 
"ego" — that  natural  pride  which  finds  expression 
externally  in  the  labelHng  of  goods.  Such  mild 
tactics  are  sure  to  meet  with  opposition,  but  they 
must  nevertheless  be  adopted,  if  we  listen  to  calm 
reasoning  and  cold  facts.     Vanity — fortunately  it  is 

170 


The  Denationalization  Dodge  171 

still  in  Its  infancy  in  Germany — must  give  place  when 
the  goal  ahead  demands  it.  What  we  propose  is  not 
a  disgraceful  sort  of  "hide  and  seek,"  but  rather  due 
consideration  for  conditions  where  sentiment  is 
master.  In  this  connection  the  reader  is  referred  to 
the  introductory  remarks. 

THE    STRATAGEM    OF   DECEIT 

In  the  early  days  of  peace  the  manufacturing 
export  trade  must  have  as  its  first  commandment 
the  following:  The  German  "make-up'*  is  to  be 
avoided  wherever  at  all  feasible,  without  the  in- 
trinsic quality  of  German  export  products  being 
allowed  to  suffer.  This  quality  must  not  only  be 
maintained,  but  also  increased,  for  it  is  the  backbone 
of  the  export  trade,  it  is  exactly  the  thing  which  is  a 
thorn  in  the  eye  of  its  enemies.  There  is  indeed  the 
danger  that  foreign  competition  may  find  easier  sail- 
ing because  of  our  action,  but  this  competition  must 
be  reckoned  as  part  of  the  bargain.  If  competitors 
turn  out  goods  of  the  same  intrinsic  value,  then 
German  goods  simply  must  be  made  better.  The 
strenuous  contest  which  thus  results  will  be  altogether 
good  for  the  German  manufacturer,  for  as  the  past 
teaches  he  knows  no  weakening.  The  intrinsic 
quality  of  exported  goods  must  be  typically  German; 
their  external  garb,  for  better  or  for  worse,  will  have 
to  be  anonymous — neutral. 

Out  of  regard  for  the  rehabilitation  of  trade  with 
formerly  hostile  countries,  the  German  garb  of  manufac- 
tured  articles  must  be  put  away. 


172     The  Future  of  German  Industrial  Exports 

The  "make-up'' — by  which  term  not  only  the 
packing  but  also  often  the  style  are  to  be  understood — 
must  for  the  present  adapt  itself  exclusively  to  the 
taste  of  the  customer  even  if  a  thorough-going  change 
in  the  manufacturing  process  be  thereby  involved. 
Unfortunately  the  world  judges  first  of  all  by  the 
looks,  and  "German"  looks  in  such  countries  will 
militate  against  the  sale  of  German  goods.  Dis- 
avowal, under  such  circumstances  is  required,  it  can 
not  be  avoided.  The  German  products  controlling 
the  world  market  were  recognizable  even  from  the 
outside  by  their  make-up;  this  furnished  people  in 
general  with  a  guarantee  of  their  intrinsic  quality. 
German  inventiveness  will  certainly  not  find  it 
difficult  to  improvise  new  make-ups  of  such  a  nature 
that  they  quickly  make  a  general  impression,  and 
again  become  a  sign  of  intrinsic  quality  without  being 
at  the  same  time  a  characteristic  German  mark. 
This  mark  is  inscribed  in  golden  letters  upon  the 
book  of  history;  it  must  not  vaunt  itself  on  every 
wrapping.  In  the  former  it  illumines  vision,  in  the 
latter  it  so  blinds  the  hostile  buyer's  eye  that  he  no 
longer  sees  the  inner  quality  of  the  article.  The  loss, 
then,  falls  to  the  German  export  trade,  the  profit 
to  foreign  competition. 

OUTWITTING   THE    ALLIED    BUYERS 

The  German  trade-mark  formerly  performed  good 
service  abroad.  Now  it  will  be  a  token  by  which  to 
recognize  the  former  enemy.  "Camouflage"  in 
war  is  an  important  strategic  method;  when  oppor- 


The  Denationalization  Dodge  173 

tunely  and  ingeniously  applied,  it  increases  the  effec- 
tiveness of  weapons.  The  appUcation  of  this  precept 
for  the  commercial  struggle  is  as  clear  as  day.  The 
German  trade-mark  does  not  conceal,  on  the  contrary 
it  acts  like  a  torch,  it  illumines — the  source!  The 
article  is  recognizedly  good,  but  the  origin  spoils 
the  whole  effect.  Away  then  with  the  German 
trade-mark  where  it  offends  feelings  which,  though 
they  are  certainly  unjustified,  must  nevertheless  be 
reckoned  with.  Away  with  it  where  it  brings  loss 
instead  of  gain.  Where  the  trade-mark  is  absolutely 
necessary  to  safeguard  property  rights,  a  foreign 
mark  must  be  used  in  its  stead;  the  increased  expense 
incurred  in  this  way  is  inconsiderable  in  comparison 
with  the  results  achieved. 

The  German  trade-mark  ought  not  to  he  used  at  first 
in  export-trade  with  formerly  hostile  countries;  the 
same  rule  holds  good  in  placing  German  patent  stamps 
on  the  outside  of  goods. 

A  SEVERE  LESSON  IN  CUSTOMS  PROCEDURE 

Too  much  stress  can  not  be  laid  upon  the  fact 
that  is  here  fundamentally  a  question  of  pre- 
cautionary measures  exclusively,  in  order  to  avoid 
injuries  to  the  manufacturing  export  trade. 

If  the  German  manufacturer  with  great  self-efface- 
ment makes  every  requisite  effort  to  banish  scoures 
of  irritation,  he  for  his  own  part  has  the  right  to 
insist  that  the  government  of  the  hostile  country 
does  not  work  against  him.  Officers  of  foreign  states, 
whether  they  be   railroad-  or  customs-officials  can 


174     ^^^  Future  of  German  Industrial  Exports 

under  no  circumstances  be  permitted  to  label  goods 
so  as  to  disclose  the  place  of  origin.  Nor  can  they 
be  allowed  to  do  this  after  laying  down  rules  under  a 
pretense  of  impartiality,  to  the  effect  that  all  im- 
ports are  to  be  labelled  in  this  way  without  regard 
to  the  particular  country  from  which  they  come. 
It  is  clear  that  the  indication  of  origin  from  a  formerly 
allied  country  represents  an  official  recommendation 
for  the  product  in  question,  and  that  a  rule  requiring 
such  a  label  in  all  cases  has  only  the  purpose  of  mak- 
ing German  goods  especially  recognizable — to  their 
disadvantage. 

It  is,  however,  not  sufficient  for  the  German  manu- 
facturer to  gain  his  point,  namely,  that  the  goods 
coming  from  him  need  not  be  thus  indicated.  He 
must  be  inexorable  in  demanding  that  no  recognizable 
mark  of  origin  may  be  used  at  all  on  goods,  without 
regard  to  the  country  from  which  they  come.  For 
the  non-marking  of  German  goods,  as  a  right  of 
exception  granted  to  them  (while  other  foreign  goods 
are  labelled)  amounts  in  actual  practice  to  giving 
away  their  origin.  The  path  to  foreign  trade  must 
not  be  beset  with  ambushes  of  this  sort,  the  possi- 
bility of  which  ought  always  to  be  taken  into  ac- 
count. If  peace  is  to  be  made,  it  must  be  a  commer- 
cial peace  also.  Secret  malicious  weapons  must  be 
destroyed  before  their  use — by  force,  if  there  is  no 
other  way. 

No  labelling  of  goods  by  the  country  of  their  origin 
can  be  permitted  foreign  officials  against  the  will  of  the 
German  exporter. 


The  Denationalization  Dodge  175 

The  German  exporter  alone  will  have  the  right 
to  decide  whether  the  origin  of  his  goods  is  to  be 
indicated;  his  order  book  will  here  determine  his 
decision. 

Of  importance  for  the  success  of  efforts  toward 
denationalizing  goods  are,  further,  the  skilful  use  of 
propaganda  abroad,  the  proper  selection  of  our 
foreign  representatives,  and  taking  advantage  of 
closely  related  business  circles  in  those  countries 
which,  during  the  war,  have  remained  neutral 
without  wavering. 

PROPAGANDA   UNDER   COVER 

*^  Propaganda  which  is  to  bring  results  must  be 
aimed  at  the  individual."  This  sentence  stands  as 
the  supreme  law  of  all  advertising  means  and 
methods.  It  is  valid  in  an  increased  degree  where 
one  must  reckon  with  people's  feelings.  In  general 
the  propaganda  will  strive  to  transform  these  feelings 
into  favourable  ones.  Here  where  it  is  a  question 
of  carrying  out  propaganda  in  countries  whose 
feelitigs  in  the  first  few  years  will  presumably  remain 
hostile  to  German  products,  this  effort  toward  trans- 
formation must  be  abandoned  because  for  the  present 
it  is  hopeless.  Rather  we  must  strive  to  make  the 
influence  of  such  feelings  secondary,  placing  in  the 
foreground  a  recognition  of  the  quality  of  German 
export  products.  Methods  of  propaganda  which, 
however  unintentionally,  could  possibly  offend  the 
national  feeling  of  the  customer  must  be  most  care- 
fully avoided. 


176     The  Future  oj  German  Industrial  Exports 

An  example  may  make  this  point  plainer:  It  is 
generally  recognized  that  the  impression  produced 
by  propaganda  is  strengthened  by  using  tables  of 
figures  which  afford  an  insight  into  the  great  output 
of  the  industry.  In  the  case  of  a  hostilely  minded 
customer  such  means  would  be  abandoned,  for  they 
give  him  an  unwelcome  view  of  the  power  of  German 
industry,  and  they  involuntarily  give  rise  to  un- 
pleasant conclusions  about  the  strength  of  his  own 
country,  and  evoke  the  desire  to  contribute  so  far 
as  possible  by  not  himself  increasing  this  quantitative 
efficiency  of  Germany — in  other  words  by  purchasing 
nothing.  It  would  be  just  as  undesirable  to  adduce 
the  usual  figures  of  comparison  with  competitors 
of  other  countries,  if  the  latter  are  allies  of  the  nation 
to  which  the  customer  belongs,  for  he  will  see  in  such 
a  comparison  an  attempt  to  detract  from  the  worth 
of  his  ally. 

The  German  export  propaganda  must  guard  against 
offending  the  national  feelings  oj  other  countries;  it 
ought  to  he  content  with  giving  concrete  and  instructive 
information. 

As  for  propaganda  in  general,  so  here,  the  principle 
holds  good  that  all  exaggeration!  and  quackery  are 
to  be  excluded,  and  that  all  efforts  must  be  directed 
solely  toward  convincing  the  future  customer  of  the 
intrinsic  value  of  the  goods  introduced  by  the 
propaganda.  Comparisons  with  the  products  of  other 
firms — German  firms  included — -are  to  be  omitted 
absolutely.  The  consequences  of  a  comparison  with 
foreign  firms  have  already  been  mentioned  above. 


The  Denationalization  Dodge  ifj 

The  consequences  of  a  comparison  with  German  firms 
eventually  have  not  only  an  injurious  effect  upon 
them,  but  also  upon  our  entire  export  trade.  They 
give  the  impression  that  this  trade  does  not  always 
draw  upon  first-class  sources.  Such  damaging  com- 
parisons ought  to  be  severely  condemned  even  if 
they  were  framed  for  the  sake  of  caution  so  as  to 
be  read  only  between  the  lines. 

You  never  add  to  your  own  reputation  by  running 
down  others.  The  foreign  propaganda  must  b« 
worked  out  in  advance  with  special  care,  it  must  have 
a  suggestive  effect  upon  the  recipient,  compelling 
him,  perhaps  unconsciously,  to  calculate  whether 
he  would  gain  by  purchasing  the  recommended 
articles.  Ifthey  justify  themselves  in  his  calculation 
then  he  is  sure  to  become  a  customer.  If  the  ejSi- 
ciency  of  the  recommended  products  is  recognized, 
and  their  superiority,  in  comparison  with  that  of 
other  foreign  products  (even  from  an  ally),  admitted, 
then  the  propaganda  has  done  its  sole  important 
duty;  it  leads  to  orders.  Emphasizing  the  origin, 
as  was  said  before,  is  of  course  to  be  avoided;  the 
question  is  not  *%here  from**  but  **what." 

The  propaganda  abroad  must  have  a  neutral  cloaky 
and  must  confine  itself  exclusively  to  proving  the  value 
of  the  recommended  articles. 

We  must  distinguish  between  printed,  written,  and 
personal  propaganda.  The  order  above  gives  at 
the  same  time  the  order  of  their  application  in  normal 
cases.  In  the  time  following  the  war  this  sequence 
must  be  inverted  in  the  formerly  hostile  countries. 


178     The  Future  of  German  Industrial  Exports 

for  it  is  almost  certain  that  foreigners,  embittered 
by  the  events  of  the  war,  will  at  first  throw  every 
communication  from  Germany  into  the  waste-basket* 
Another  means  must  be  used  to  regain  attention  for 
these  communications.  This  will  be  attained  only 
by  degrees,  and  only  by  intensive  personal  influence. 
With  this  matter  is  bound  up  the  question  of  the 
future  organization  of  foreign  branches  and  represen- 
tations which  likewise  are  to  be  used  as  means  of 
neutralization. 

An  advantageous  path  for  the  future  propaganda 
abroad  can  be  found  by  starting  from  neutral  territory. 

A  FLANK  MOVEMENT  THROUGH  NEUTRAL  GROUND 

This  compromise  is  proposed  because  we  are  not 
justified  in  assuming  that  in  every  individual  case  a 
citizen  of  the  foreign  country  in  question  can  at  once 
be  found,  who  is  competent  to  represent  German 
manufacturers  satisfactorily.  At  least  in  the  be- 
ginning foreign  experts  who  are  fitted  for  this  work 
will  shrink  from  taking  a  German  agency.  There 
will  doubtless  be  numerous  persons  abroad  who 
would  be  ready  to  represent  our  firms,  but  who  will 
protest  that  for  the  moment  they  could  scarcely  be 
successful  with  German  manufactures  because  they 
would  run  the  risk  of  putting  themselves  in  a  bad 
light  before  their  countrymen.  Even  the  offer  of 
steady  compensation  independent  of  first  results 
might  here  not  answer  the  purpose,  even  apart  from 
the  fact  that  there  would  be  great  danger  of  its 
misuse.     A  satisfactory  compromise  can  be  found 


The  Denationalization  Dodge  179 

by  making  the  foreigner  only  indirectly  an  agent  for 
his  German  concern.  He  would  get  his  immediate 
orders  through  a  neutral  firm. 

It  must  be  admitted  that  a  certain  complication 
arises  here;  however,  it  can  scarcely  be  avoided. 
One  ought  not  to  surrender  himself  to  the  optimistic 
opinion  that  it  will  be  sufficient  to  erect  a  branch 
establishment  in  a  neutral  nation,  and  that  the  form- 
erly hostile  countries  will  be  worked  from  this  point. 
Success  by  this  method  seems  pretty  much  out  of 
the  question,  for  foreign  countries  will  investigate 
carefully  and  soon  uncover  the  true  state  of  affairs. 
There  will  be  firms  which  keep  trying  to  reopen 
their  foreign  (at  present  confiscated)  branches  after 
the  war  by  gathering  a  staff  inclusive  of  the  directing 
officers,  from  the  foreign  country  in  question.  It  is 
to  be  feared  that  this  makeshift  will  not  at  first  bring 
success,  any  more  than  the  foundation  and  operation 
of  apparently  independent  foreign  firms.  The  best 
remedy  will  ^always  be  found  through  neutral  coun- 
tries. The  decrease  in  profits  resulting  from  this 
use  of  intermediaries  ought  not  of  course  to  be  made 
up  by  raising  prices  but  rather  by  lessening  the  cost  of 
production,  since  in  every  case  superiority  in  prices 
must  be  preserved. 

The  reopening  of  export  relationships  with  once 
hostile  countries  must  take  place  through  neutrals  in- 
stead of  through  direct  representatives  as  in  the  past. 

This  rule  blazes  a  path  to  be  followed  in  conducting 
propaganda.  Again  as  before,  its  elaboration  and 
organization  will  be  left  to  the  German  manufacturer 


l8o     The  Future  of  German  Industrial  Exports 

(provided  he  observe  the  points  mentioned  above), 
but  it  will  be  conducted  entirely  from  neutral  terri- 
tory. The  printed  matter  destined  to  promote  our 
export  trade  ought  accordingly  to  be  worded  and 
finished  up  in  such  a  way  that  neutrals  can  make 
direct  use  of  it.  Tliey  will  have  to  receive  it  and 
pass  it  on  according  to  the  system  evolved  by  the 
German  manufacturers.  The  results  of  thp  propa- 
ganda, including  the  negative  ones,  are  to  be  trans- 
mitted by  neutrals  to  the  German  concerns  in  order 
that  the  latter  may  themselves  compile  the  necessary 
propaganda  statistics,  and  learn  from  them  the 
lessons. 

To  simplify  matters,  the  epistolary  propaganda 
will  be  drawn  up  in  Germany,  ready  for  mailing,  and 
will  be  sent  to  the  neutral  power  for  further  distri- 
bution. The  orders  coming  in  to  the  latter,  when- 
ever possible,  will  be  filled  directly  from  the  German 
production  plant,  while  the  invoices  fully  prepared 
for  the  mails  are  transmitted  to  the  neutral.  The 
incoming  payments  pass  through  the  neutral's  bank- 
ing connections  to  those  of  the  German  manufac- 
turer. If  import  difficulties  prevent  the  goods  from 
being  shipped  directly,  a  route  must  be  found 
through  a  neutral  country.  The  neutral  country 
will  doubtless  profit  by  this;  this  profit  may  neither 
be  curtailed  nor  looked  upon  invidiously,  for  the 
neutral  performs  valuable  pioneer  service  for  Ger- 
many's industrial  exports.  He  brings  business  to 
our  manufacturers  which  otherwise  would  be  lacking 
or  at  least  doubtful.     We  must  respect  the  rule  not 


The  Denationalization  Dodge  i8i 

to  begrudge  another  his  gain  when  our  own  is  suffi- 
cient. It  ought  also  to  be  remembered  that  neutral 
countries  in  a  certain  sense  have  had  to  suffer  more 
through  the  war  than  the  belligerents,  and  that  for 
the  latter  they  have  performed  valuable  services, 
which  demand  recognition.  This  recognition  can 
be  evidenced  all  the  more  easily  if  in  so  doing  our  own 
advantage  is  served.  In  this  discussion  only  those 
neutrals  are  meant  whose  neutrality  was  above 
all  doubts,  and  who  in  maintaining  it  looked  neither 
to  the  right  nor  the  left. 

The  profit  which  neutrals  make  hy  acting  as  inter- 
mediaries is  entirely  justified^  since  it  naturally  carries 
with  it  profits  for  our  exporters. 

The  management  of  advertising  in  foreign  papers 
will  be  carried  on  through  neutrals  under  the  direc- 
tion of  the  German  manufacturer.  Special  attention 
should  be  paid  to  neutral  trade  journals  which  are 
issued  in  various  countries.  They  represent  ex- 
cellent disseminating  mediums  not  only  for  advertise- 
ments, but  also  for  instructive  information  concern- 
ing new  inventions  and  methods  of  applying  them. 
Account  must  be  taken  of  the  fact  that  it  will  require 
a  long  time  for  technical  journals  published  in  Ger- 
many to  regain  currency  and  circulation  in  hostile 
countries  to  that  degree  which  is  necessary  for  pro- 
moting our  export  trade. 

Neutral  trade  journals  represent  an  effective  means 
for  promoting  the  German  manufacturing  export  trade. 

If  rightly  managed,  neutral  agencies  will,  more- 
over, facilitate  the  supply  of  those  raw  materials 


1 82     The  Future  of  German  Industrial  Exports 

which  German  industry  needs  from  abroad.  Just  as 
direct  trade  with  formerly  hostile  countries  will  meet 
with  export  difficulties,  so  likewise  obstacles  will  be 
placed  in  the  way  of  securing  raw  materials.  They 
ought  to  be  removed  whenever  possible  without  slate 
assistance — ^which  should  be  the  last  resort.  Foreign 
countries  will  not  hesitate  to  ship  raw  materials  to 
neutrals  without  any  burdensome  restrictions,  for 
v/hat  they  are  concerned  with,  after  all,  is  a  sure 
market.  If  they  can  secure  one  without  getting 
into  closer  connections  with  the  citizens  of  a  former 
enemy,  they  will  certainly  welcome  this  solution  of 
the  problem.  If  a  neutral  power  is  used  in  eliminat- 
ing the  troubles  of  the  raw-materials  question,  we 
will  profit  by  the  fact  that  accounts  can  be  mutually 
cancelled  through  it,  in  the  country  where  we  buy 
and  sell.  The  remainder  due  us  is  therefore  all  that 
need  be  transmitted  to  Germany. 

In  war  we  recognize  the  advantages  of  domestic 
money  not  only  remaining  at  home,  but  also  circulat- 
ing there;  in  peace  times  also  we  should  try  to  pre- 
serve this  condition  as  far  as  possible.  This  can 
be  done  if  our  exports  exceed  our  imports  (an  aim 
we  should  keep  always  before  us)  so  that  the  pay- 
ment for  our  imports  can  be  made  by  direct  clearance 
in  the  foreign  country  in  question.  To  facilitate 
this,  it  will  be  well  to  establish  special  neutral  clear- 
ing offices  for  balancing  (transferring)  accounts. 

Neutrals  will  perform  good  service  in  the  procuring 
of  raw  materials^  and  in  making  possible  an  agreeable 
financial  settlement. 


T\HE  German  confidence 
in  the  outcome  of  his 
ruthless  cut-throat  bat-' 
tie  for  the  markets  of  the  world 
IS  ultimately  based  upon  a  com- 
placent  assurance  of  their  su- 
perior genius.  They  propose  to 
reinforce  this  with  a  really 
formidable  weapon — high  speed 
and  painstaking  ef^ciency.  All 
small  traders  and  manufac- 
turers are  to  be  eliminated 
without  pity.  Production  is  to 
be  mobilized  in  great  Trusts 
and  strictly  standardized.  The 
labour  is  to  be  permanent  and 
hereditary.  No  man  in  Ger- 
many will  be  allowed  to  con- 
duct a  plant  unless  he  adopts 
the  military  regulations  de- 
fining efficiency.  And  incom- 
petence and  failure  will  be 
marked  down  for  the  wrath 
and  annihilation  of  the  State. 
Efficiency  is  not  only  to  be 
taught  and  studied,  but  com- 
manded. 


CHAPTER  THIRTEEW 

THE    HEREDITARY   WORKMEN   OF   COM- 
BINED INDUSTRIES 

The  Ban  on  the  Small  Business  Man — "Permanent"  and 
"Hereditary"  Labour — ^The  Crime  of  Incompetence — A  Drastic 
Remedy  for  Bargain  Sales. 

9.    Competitive  Ability 

RAW  materials  and  industrial  products  can 
count  upon  sale  if  their  usability  and  effec- 
^  tiveness  keep  pace  with  that  of  others  in  the 
market.  They  will  supplant  the  latter  if  they  are 
superior  in  quality  and  if,  at  the  same  time,  their 
selling  price  does  not  exceed  the  market  price. 

Considering  the  obstacles,  mentioned  earlier, 
which  can  be  placed  in  the  way  of  our  export  trade 
in  future,  and  which  must  for  the  most  part  be  ex- 
pected, we  must  under  all  circumstances  avoid  han- 
dicaps in  construction  or  price  that  could  injure  our 
sales  abroad.  All  products  of  German  manufacture 
destined  for  export  must  be  able  to  compete  in  the 
matter  of  technical  workmanship  and  price. 

No  special  discussion  is  necessary  to  show  that  the 
manufactured  products  of  the  great  German  indus- 
tries answer  in  the  main  these  two  requirements. 
In  future,  however,  our  export  trade  must  count  on 

184 


The  Hereditary  Workmen  of  Combined  Industries  185 

the  lively  participation  of  our  middle  and  smaller 
industries.  A  compromise  can  perhaps  be  found  by- 
forming  for  the  individual  branches  of  industry, 
export  associations  which  will  handle  orders  within 
this  country,  and  likewise  act  as  exporters.  Their 
producers  will  be  the  middle  and  smaller  manufac- 
turers. By  uniting  many  small  industrial  forces 
under  a  single  hand,  an  efl&cient  export  concern  will 
be  formed  which  can  follow  the  same  paths  as  the 
great  individual  firms.  Only  when  all  forces — even 
the  smallest — cooperate,  will  our  export  trade  reach 
a  size  which  corresponds  to  the  efficiency  of  German 
industry. 

In  this  effort,  however,  it  is  undoubtedly  neces- 
sary for  the  middle  and  smaller  industries  to  follow  in 
their  work  the  same  principles  as  the  great  industries. 

"permanent''  and  ''hereditary"  labour 

The  middle  and  smaller  industries  should  confine 
themselves  to  as  narrowly  limited  branches  of  manu- 
facture as  possible,  and  should  give  up  producing 
all  the  necessary  parts  themselves.  The  greater 
the  number  of  these  parts,  the  more  mechanical  en- 
ergy and  capital  resources  are  split  up  and  spread 
out.  The  principle  of  a  division  of  labour  which 
bears  such  splendid  fruit  during  the  war  in  Germany 
ought  also  to  be  adhered  to  in  time  of  peace.  The 
smaller  the  number  of  different  parts  to  be  manu- 
factured, the  easier  it  will  be  to  train  an  hereditary, 
highly  specialized  line  of  workers,  and  to  keep  and 
employ  them  permanently. 


1 86     The  Future  of  German  Industrial  Exports 

Since  all  intellectual  and  mechanical  energy  is  ap- 
plied to  the  mastery  of  fewer  processes,  it  is  to  be 
expected  that  the  technical  perfection  of  the  prod- 
ucts will  be  as  great  as  possible.  The  smaller  the 
number  of  different  parts  to  be  produced,  the  fewer 
will  be  the  kinds  of  machinery  necessary  for  the  work, 
and  the  less,  therefore,  will  be  the  capital  required. 
The  expense  account  will  have  smaller  interest  pay- 
ments to  make,  for  the  amount  of  capital  needed  is 
largely  determined  by  the  floor  space  and  equipment. 
Supervision  of  work  becomes  a  simpler  matter,  the 
organization  is  easier  to  control,  the  precision  of  the 
work  can  be  regulated  with  fewer  instruments,  all 
in  proportion  as  the  range  of  manufacture  is  limited. 
In  place  of  a  great  deal  of  minor  work,  there  will  be  a 
single  specialty  to  which  all  efforts  are  devoted.  All 
these  directions  are  aimed  at  placing  the  middle  and 
smaller  industries  in  a  position  to  produce  articles 
which  cannot  be  surpassed  in  technical  workman- 
ship. 

If  this  direction  is  followed  out,  the  capacity  of  the 
plants  will  automatically  become  very  high,  and  will 
increase  as  the  number  of  different  materials  and 
finished  products  is  cut  down.  Just  as  the  separate 
divisions  of  the  great  industries  work  hand  in  hand, 
and  to  a  certain  extent  represent  within  themselves 
produpcer  and  consumer  in  mutual  cooperation,  so 
the  middle  or  smaller  manufacturer  must  work.  He 
must  think  of  himself  as  the  head  of  a  division,  en- 
gaged exctusively  in  the  production  of  a  certain  kind 
of  goods  which  are  closely  related  to  the  products  of 


The  Hereditary  Workmen  of  Combined  Industries  187 

other  manufacturers  (imaginary  divisions  of  indus- 
try as  a  whole). 

Superiority  in  the  construction  and  price  of  Ger- 
man industrial  products  over  those  of  foreign  com- 
petitors is  a  pre-requisite  for  the  prosperity  of  the  ex- 
port trade. 

THE    CRIME    OF    INCOMPETENCE 

It  seems  necessary  to  call  attention  to  an  undesir- 
able class  of  individuals  who  were  only  half- 
heartedly opposed  before  the  war,  but  who  now  ought 
to  be  ferreted  out  relentlessly.  Manufacturers  who 
lack  the  necessary  talent  for  organization,  who  give 
too  little  attention  to  accounting,  and  who  start  a 
business  with  insufficient  means,  really  belong  in  the 
category  of  production  costs,  which  make  coopera- 
tion against  foreign  competition  impossible.  Worthy 
understudies  of  theirs  are  to  be  found  in  those  en- 
terprisers who  by  failing  to  understand  the  market 
or  in  the  stubborn  purpose  of  creating  a  favourable 
market  artificially,  increase  their  output  to  a  degree 
that  is  entirely  out  of  proportion  to  the  demand.  To 
both  sorts  of  enterprisers  comes  the  instant  when 
they  must  dispose  of  their  goods  at  any  price,  in  order 
to  be  able  to  meet  their  further  obligations,  or  in 
order  to  get  new  working  materials.  Generally 
they  will  not  wait  for  the  perilous  moment  to  come, 
but  will  already  have  planned  how  to  get  their  prod- 
ucts into  the  hands  of  the  customers.  Experi- 
ence shows  that  they  get  rid  of  their  goods  by  price- 
cutting,  and  by  offering  them  far  below  the  market. 


1 88     The  Future  of  German  Industrial  Exports 

A   DRASTIC   REMEDY   FOR   BARGAIN   SALES 

In  our  future  trade  with  old  enemies,  such  individ- 
uals will  cause  immense  loss.  As  it  is  essential  to  the 
export  trade  that  we  always  be  strong  competitors 
in  the  matter  of  prices,  there  is  a  minimum  figure 
set  by  the  limit  of  profitableness,  which  we  can 
never  allow  to  be  passed,  if  the  continuation  of  the 
industry  is  not  to  be  endangered.  Every  transgres- 
sion of  this  limit  brings  others  after  it,  and  hastens 
the  coming  ruin.  Foreign  countries  become  sus- 
picious when  German  articles  of  the  same  kind  are 
offered  to  them  at  widely  varying  prices.  They  be- 
gin with  right  to  exert  pressure  on  prices  in  general, 
in  order  not  only  to  get  cheaper  goods  but  also  to 
injure  German  industry,  and  with  it,  or  through  it, 
the  German  industrial  trade.  As  soon  as  price- 
cutting  has  or  threatens  to  have  consequences 
which  could  injure  our  export  trade,  the  practice 
must  be  stopped  by  an  exercise  of  state  authority, 
or  by  the  remedies  within  the  hands  of  the  industrial 
associations. 

The  competitive  ability  of  German  industrial  ex- 
ports in  the  matter  of  price  must  not  be  reducible  to  the 
point  of  slaughter  prices. 


A  SSUMING  the  role  of 
ZJk  the  supply  train,  the 
bankers  and  capitalists 
of  Germany  will  henceforth 
supply  their  golden  ammuni- 
tion to  German  commercial 
units  only.  The  High  Com- 
mand in  Potsdam,  perceiving 
that  the  JEntente  has  no  more 
moral  regard  for  property  than 
to  seize  German  accounts,  has 
decreed  that  henceforth  no 
German  money  shall  be  in- 
vested except  in  German  in- 
dustries, and  in  those  outposts 
of  the  advancing  German  ex- 
port trade  which  directly  profit 
in  the  commercial  war.  And 
this  plan  further  contemplates 
two  other  rigid  limitations  up- 
on all  banking.  That  no  allied 
capital  shall  ever  find  its  way 
into  the  ^'Indispensable  In- 
dustries'^ of  Germany  and 
that  for  a  German  banker  to 
refuse  a  loan  to  one  of  these 
^'offensive  units,''  is  strictly 
'Werboten.'' 


CHAPTER   FOURTEEN 

THE  CURB  ON  CAPITAL 

The  Kaiser's  Complaint:  The  Predatory  Allies  Violate  Private 
Property! — ^The  Evil  Influences  of  Independence — ^The  Blessings 
of  Financial  Bondage — German  Money  for  Germany — Relation 
of  Investments  to  Invasion. 

lo.     Capital 

THE  results  of  our  entering  into  a  state  of  war 
were  very  destructive  for  German  capital 
engaged  in  enterprise  abroad.  It  is  to  be 
hoped  that  we  shall  not  forget  that  lesson  when  peace 
is  restored.  However  great  the  damage  may  be,  it 
can  be  forgotten  and  repaired  if  in  future  the  Ger- 
man capitalist  will  constantly  bear  in  mind  the  fact 
that  circumstances  may  arise  where  our  capital  in 
foreign  countries  may  be  entirely  outlawed.  The 
enemies  of  Germany  who  have  simply  thrown  over- 
board all  traditional  conventions  and  law  did  not 
delay  a  moment  on  the  way  which,  to  use  the  mildest 
expression,  led  to  violation  of  private  property  rights. 
Of  course  we  cannot  and  should  not  require  capital 
to  be  withheld  absolutely  from  enterprises  abroad; 
but  experience  teaches  that  among  foreign  en- 
terprises we  should  carefully  distinguish  between 
those  under  foreign  and  those  under  German  man- 

190 


The  Curb  on  Capital  191 

agement,  between  those  advantageous  and  those 
detrimental  to  German  industry,  those  working  for 
it  or  against  it,  and  those  which  represent  its  allies, 
or  its  competitors.  All  German  capital  which  is  in- 
vested in  foreign  countries  must  be  sure  not  only 
of  being  returned  to  Germany  in  its  cycle,  but  also 
of  constantly  having  a  stimulating  and  beneficial 
effect  upon  German  industry, 

German  capital  in  future  is  to  be  invested  only  in 
work  under  German  directors^  and  even  then  not  in 
foreign  countries  unless  it  brings  benefit  and  support 
to  our  industrial  export  trade. 

THE  EVIL  INFLUENCES  OF  INDEPENDENCE 

Certain  financial  and  banking  circles  will  surely 
take  a  position  against  this  requirement.  These 
circles  are  not  at  all  interested  in  serving  the  com- 
mon welfare  first  and  then  the  safety  of  the  capitalist, 
but  rather  in  reaping  the  highest  profits  possible 
from  their  investments.  In  recent  years  there  has 
already  been  on  foot  a  precautionary  movement 
against  the  flow  of  German  capital  into  foreign  coun- 
tries; there  has  as  yet,  however,  been  no  recourse  to 
decisive  measures.  To  the  expert  who  understood 
financial  conditions  it  was  most  depressing  to  see  our 
own  German  capital  lured  abroad  by  high-sounding 
promises,  often  when  that  meant  *^ good-bye  for 
good,"  while  at  the  same  time  German  industry  often 
had  to  go  into  foreign  countries  in  order  to  get  to- 
gether the  capital  it  needed — at  a  heavy  sacrifice. 
A  large  number  of  German  undertakings  which  were 


192     The  Future  of  German  Industrial  Exports 

founded  in  recent  years  fell  through  after  a  compar- 
atively short  time,  the  failure  in  its  mildest  form  lead- 
ing to  a  pooling  of  the  capital  stock.  The  reason  was 
perhaps  not  so  much  that  their  foundations  were 
rotten,  or  that  the  officers  in  the  producing  or  selling 
end  of  the  business  lacked  expert  knowledge,  but  was 
solely  that  the  financial  sacrifices  which  had  to  be 
made  beforehand  to  secure  capital  abroad  were  so 
heavy  that  they  consumed  not  only  profits  but  capi- 
tal also. 

The  short-sightedness  of  many  industrial  circles  in 
Germany  is  really  incomprehensible  when  one  con- 
siders that  any  control  over  capital  which  has  gone 
abroad  is  almost  impossible,  while  control  over  that 
invested  in  domestic  industries  at  home  is  at  all  times 
possible.  The  introduction  of  foreign  capital  into 
German  industrial  enterprises  represents  under  some 
circumstances  a  source  of  danger  for  them  and  the 
export  trade,  which  could  certainly  be  avoided  if  we 
could  get  rid  of  such  short-sightedness.  Practical 
experiences  teach  us  only  too  well  that  in  many  cases 
foreign  capital  is  invested  in  German  concerns  only 
for  the  purpose  of  destroying  their  export  trade, 
either  through  the  foreigner's  right  to  a  voice  in  the 
business  being  used  to  fathom  the  manufacturing 
secrets  and  methods  and  to  transplant  these  abroad, 
or  through  unscrupulous  directors  being  appointed 
to  undermine  the  strength  of  the  enterprise  in  com- 
peting with  foreigners.  More  than  ever,  the  war  is 
teaching  us  that  German  organization  celebrates  its 
greatest  triumphs  even  along  industrial  lines,  when 


The  Curb  on  Capital  193 

foreign  influence  is  kept  away;  likewise  that  German 
capital  would  then  be  at  hand  in  superfluity  to  back 
all  German  concerns  without  need  of  foreign  help. 
German  capital  ought  not  to  be  put  at  the  service  of 
foreign  industrial  undertakings  under  German  lead- 
ership until  domestic  industry  no  longer  needs  it. 
Support  must  proceed  from  within  outward,  not 
from  without  inward. 

Our  export  trade  will  he  helped  if  the  flow  of  German 
capital  into  foreign  countries  is  stopped. 

THE    BLESSINGS   OF    FINANCIAL   BONDAGE 

It  is  primarily  the  duty  of  the  banks  to  afford  the 
guidance  and  instruction  needed  in  this  situation. 
We  must,  however,  admit  the  deplorable  fact  that  in 
many  cases  it  is  by  the  banks  themselves  that  the 
German  manufacturer  is  denied  a  just  appreciation 
of  his  circumstances.  The  old  proverb — "a  prophet 
is  not  without  honour  save  in  his  own  country'' — 
still  holds  true.  Between  the  manufacturer  who  is 
seeking  capital  and  many  German  banks  there  exists 
a  profound  antagonism  which  expresses  itself  even 
in  the  first  proposals.  The  banks  rightfully  demand 
a  thorough  preliminary  investigation  by  an  indus- 
trial expert,  and  also  an  examination  from  the  busi- 
ness standpoint.  Here  they  make  a  mistake  by 
stipulating  that  the  investigation  is  to  be  conducted 
by  their  own  employees.  The  manufacturer  opposes 
that  for  two  reasons,  one  of  which  is  certainly  jus- 
tified, and  often  the  other  also  (according  to  the  char- 
acter of  the  bank).     The  manufacturer  takes  his 


194     The  Future  of  German  Industrial  Exports 

stand  against  the  industrial  employee,  because  he  is 
of  the  opinion  that,  as  an  employee,  the  latter  can 
not  judge  objectively,  and  because  it  is  possible  that 
the  bank  in  question  stands  in  closer  connection 
with  another  concern  of  the  same  kind,  so  that  man- 
ufacturing secrets  and  advantages  might  most  easily 
be  communicated  to  the  latter. 

It  can  not  be  denied  that  this  opinion  has  a  certain 
justification.  A  compromise,  satisfactory  to  both 
parties,  will  be  found  if  independent  experts  from  out- 
side are  entrusted  with  the  examination.  The  manu- 
facturer further  justly  opposes  the  bank's  wish  to 
make  a  simultaneous  business  investigation,  which 
allows  it  an  insight  into  the  most  intimate  circum- 
stances of  the  undertaking,  an  insight  which  consid- 
ering the  close  connection  of  banks  with  each  other 
can  become  dangerous  if  the  demand  for  capital  is  not 
granted.  As  a  general  thing  the  business  investi- 
gation ought  not  to  take  place  until,  upon  the  basis 
of  the  industrial  investigation,  the  bank  has  de- 
clared itself  thoroughly  in  favour  of  granting  the 
capital,  provided  that  the  business  conditions  be 
sound. 

The  judgment  of  German  industrial  undertakings 
hy  the  banks  with  a  view  toward  financing  them  must  be 
kept  purely  objective  in  future, 

RELATION    OF    INVESTMENTS    TO    INVASION 

German  capital,  as  a  matter  of  principle,  ought  to 
take  stock  in  foreign  enterprises  only  when  its  in- 
fluence upon  their  management  can  be  permanently 


The  Curb  on  Capital  195 

preponderating,  for  the  purpose  of  promoting  our 
export  trade,  or  of  supplying  German  industry  with 
raw  material.  In  certain  cases  such  an  interest  will 
be  acquired  as  a  provision  for  opening  up  new  chan- 
nels for  German  workmanship.  If  such  an  invest- 
ment in  the  stock  of  a  foreign  concern  is  made  solely 
by  industrial  circles  who  have  a  special  interest  in  the 
shipping  business  which  that  concern  will  carry 
on,  they  will  be  justified  in  putting  up  with  compara- 
tively low  dividends,  provided  that  other  profits  or 
benefits  result  from  the  shipments,  and  that  Ger- 
man industry  is  assured  of  receiving  all  future  deliv- 
eries. In  no  case,  however,  should  our  industries 
themselves  buy  the  foreign  stock;  this  can  be  al- 
lowed only  the  capitalist  circles  related  to  them. 
Industrial  concerns  should  be  builders,  not  bankers; 
their  funds  ought  to  be  applied  solely  within  their 
own  business.  These  related  capitalists  can  exercise 
sufficient  influence  over  the  foreign  concern  in  favour 
of  our  industries. 

Capital  in  the  service  of  our  domestic  industries  must 
be  absolutely  debarred  from  acquiring  an  interest  in 
foreign  concerns  even  for  the  purpose  of  safeguarding 
our  imported  supplies^  because  such  participation 
might  in  a  financial  way  involve  a  weakening  of  do- 
mestic  efficiency. 

Innumerable  industrial  values  have  been  destroyed 
by  the  war.  Their  restoration  will  demand  increased 
activity  from  Germany's  industry,  which  will  doubt- 
less require  an  abundant  supply  of  capital  to  accom- 
plish the  coming  tasks.     The  economic  and  financial 


196     The  Future  of  German  Industrial  Exports 

preparation  for  supplying  this  capital  needed  after 
the  war  ought  to  be  carried  out  and  finished  in  good 
season.  Likewise  German  capital  should  be  made 
aware  in  good  season  of  the  advantages  which  it  can 
gain  from  participating  in  German  industrial  enter- 
prises. Too  much  illuminative  instruction  can  not 
be  given  in  this  matter,  if  the  following  demand  is 
to  see  fulfilment : 

German  capital  for  German  technical  industry. 


END 


THE   COUNTRY  LIFE  PRESS 
GARDEN   CITY,   N.   Y. 


THIS  BOOK  IS  DUE  ON  THE  T  A^m  ^ 

STAMPED  BeI^w^^'^^^TE 

-^-^s^j"^°-2«  CENTS 


QEC--4._ia33^| 


^— SOMat'WtOi 


3827-89 


/; 


UNIVERSITY  OF  CAUFORNIA  UBRARY     .  W 


i 

i 


m 


mMl 


mm 

■■l'(.;i![l;*!!-;iP 


':;i''::;l!Hi  I 


nm 


mm 


iiiiisiiiiii 


